It seemed that way for most of last year prediction markets ushered in a new golden age of fraud. Active Polimarketmerchants acquired wealth questionably timed bets to geopolitical events such as the invasion of Venezuela and the Iran war. Because Polymarket’s cryptocurrency platform is technically offshore and not regulated or licensed domestically, it was unclear whether the US government would pursue some of the more blatantly bad actors.
And now, the Commodity Futures Trading Commission, which oversees the prediction markets, wants you to know that it’s watching very, very closely. The agency is looking for suspicious behavior from traders who use virtual private networks to sneak into offshore markets in the US, including state-blocked cryptocurrency platform Polymarket. “We’re going to find them and we’re going to take action,” agency chairman Michael Selig told WIRED this week, speaking from CFTC headquarters in Washington.
Selig says the agency, which is currently particularly lean, is being staffed. Like many other AI-powered workplaces, the CFTC is turning to automation to handle its growing workload, including tools that analyze trading patterns and flag potential manipulation. “You have a lot of information,” Selig said. “When we put it into AI, we get really big data. It can help us understand things like places we want to investigate or when we should send a subpoena to a trader.”
In addition to special control systems developed in the company, the agency’s arsenal includes third parties. blockchain tracking tools such as market abuse detection software, including Chainalysis for cryptocurrencies and Nasdaq Smarts for centralized markets. (Other than Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples.)
