Intrade, the online trading site that specialized in cash wagers on real-world events—who will become the next pope, for example—has shut down under murky circumstances.
The notice posted on Intrade’s homepage gave precious little reason for the shutdown, aside from alluding to “circumstances recently discovered” and possible “financial irregularities.” Under Irish law, the unnamed shenanigans forced the Website’s directors to cease exchange trading, stop banking transactions from company accounts, and settle all open positions and calculate members’ account values.
“At this time and until further notice, it is not possible to make any payments to members in accordance with their settled account balance until the investigations have concluded,” read the notice. “The Company will continue the maintenance and technology operations of the exchange system so that all information is preserved properly.”
Just to underscore the DEFCON-1 nature of the situation, the Website has taken its telephone support and live help services offline, although their email apparently remains live.
As noted by The New York Times, Intrade already faced concerns over insufficiently documented payments to company founder John Delaney and various third parties. Delaney died while trying to summit Mount Everest in 2011. The Times suggested it was unclear whether that audit, and its discovery of the payments, was related to the current shutdown.
Nor was that audit the first time Intrade encountered some trouble: in December 2012, the company found itself embroiled in controversy with the Commodity Futures Trading Association (CFTC), which launched a lawsuit accusing it of violating U.S. laws. “We will intervene in the ‘prediction’ markets, wherever they may be based, when their US activities violate the Commodity Exchange Act or the CFTC’s regulations,” David Meister, the director of the CFTC’s Division of Enforcement, wrote in a statement reprinted at the time by The Verge.
Predictive markets such as Intrade have helped popularize the idea of crowdsourcing, which suggests large groups of people are ultimately better at making decisions than individuals. However, some Websites and pundits have questioned the accuracy of Intrade’s system, pointing to the times when its crowds wrongly predicted future events such as the U.S. Supreme Court ruling in favor of the Affordable Care Act. Despite that debate—and Intrade’s current troubles—it’s unlikely that the use of crowdsourced data will go away anytime soon.