A common attack of fortune tellers and psychics is that if they indeed had such powers, they would simply pick the winning lottery numbers, and not bother scamming people out of their money. So, did InTrade, the leading prediction market, predict its own demise. To quote the Magic 8-Ball (a mystery to Justice Scalia–you could say that Scalia is behind the 8-ball), “Very doubtful.”
The Times reports that InTrade may be facing an imminent liquidation due to undisclosed financial irregularities–it looks like someone scammed them to the tune of $3.5 million.
The online betting Web site Intrade, which gained widespread notice for serving as a predictions platform for elections and non-sports-related events, is facing liquidation because of a $700,000 cash shortfall, a development that comes a month after it halted trading and froze its customer accounts.
Intrade’s director, Ronald Bernstein, said in a statement that the shortfall resulted from unspecified actions by two other parties, whom he did not name. The potential liquidation was first reported late Friday by Business Insider,
“We are now very confident about the reasons which caused the current circumstance of the Company; however, for legal reasons we are not yet at liberty to document them to you,” the statement said. “I can confirm that the company, if it is able, intends to vigorously pursue two substantial monetary claims against two distinct parties for an aggregate amount greater than $3,500,000.”
“If the Company is not able to rectify this cash shortfall position very quickly, the Company will become insolvent and therefore is very likely to go into liquidation,” the statement said.
Recently InTrade filed an answer in its case against the CFTC rather than a Motion to Dismiss. That struck me as an odd move. I figured they are simply aiming for summary judgment, but now methinks that they may not even be able to litigate the matter. I’ll keep you posted.