I was curious how a man in Switzerland gets charged in the US for a placing bets on a site that doesn't allow the US to participate.
The short answer seems to be that he stole private information from a US company and used that information to enrich himself. And then got that charge enhanced with things like wire fraud and transacting on systems involving US currency.
And another commentor suggests that punishing insider traders in a step towards legitimzing and regulating prediction markets in the US.
Of course he should be punished but the best lesson here is for bettors. Those who wager on "prediction markets": you are betting against people who have access to more information or can influence the outcome of the wager. Don't waste your money.
That's sort of the point of prediction markets: they surface insider information by allowing people to profit off of it. The benefit is to people watching the prices, who can then use that information to make better decisions ahead of the answer being revealed to the public. It's not necessarily to market participants, who need to be aware of who else is trading the market and have a credible reason to believe they have better information.
The unfortunate thing is that, while their academic position sounds plausible on paper, just like with most crypto things it's just a money grab.
How many crypto people (with legitimate backgrounds just like the founders of Polymarket and Kalshi) stood up and said big things about freedom and the unbanked etc., turns out they were literally just scamming people- there are so many examples besides FTX.
Letting people bet on any random thing is not at all related to this "price everything" theory. If that was their real goal they wouldn't behave so much like a normal sports betting company. I have yet to actually hear anyone defend their actual actions in a plausible way.
It barely makes sense, though? The idea is that it will surface insider information to the public. That happens only because the insider is financially incentivized to place a bet. But they will only bet if they can win money, and they can only win money if someone is taking the other side of their bet, which necessarily means someone without their insider information.
In other words, prediction markets require suckers to lose money to insiders in order for the public to learn new information. In this case, people lost over a million dollars to an insider so the public could learn that "d4vd" was searched a lot.
That’s the academic theory behind these markets, but there’s no actual value to knowing who the most searched celebrity will be or any of this other garbage. It’s just an unregulated casino with guesses about the popularity of Google searches instead of guessing black or red.
It’s not rare nowadays that speculation on some topic will include the Polymarket rates. Google searches: Maybe not. Maybe that’s just gambling for the fun of it.
I think they are open about it. John Oliver did a piece on it last month and I recall an interview where the founder of one of these prediction markets shared this as a beneficial effect of the product.
Hmm, not following. The insider trade in this case was small enough to not change the lines meaningfully, no? D4vd's chances of being #1 went from <1% to >99% nearly overnight, was a huge upset.
Polymarket might be different, but conventional Vegas-style lines change with the amount of $$ bet, if the pool is $50M and an insider bets $10k on the long shot, the line isn't moving -- I don't see how insider information can be surfaced in this scenario except after the fact (and only maybe then).
In other words, if the line changes enough to signal insider info, it's not really insider info anymore.
Because these markets aren't all that efficient yet (possibly because other potential market participants are scared off by insider trading charges). You don't have multiple people that all have insider information betting against each other, you have one person with insider information that cleans out everybody else. If this repeats enough, all the people without insider information will get cleaned out and exit the market, all the other people with insider information will enter the market for profit, and prices should converge to true likelihood.
And yes, the whole purpose of prediction markets is to turn insider info into public info.
But you just said "The benefit is to people watching the prices" -- but if the odds haven't properly converged what information does watching the prices get you before-the-fact?
Maybe I'm just not getting it, could you lay out a scenario?
The point is to make money by letting people gamble on the future. What you said is a second order effect of doing the first thing. They should at least be regulated under gambling laws, doesnt make sense without it
What Polymarket says on the topic (https://integrity.polymarket.com/) is that they do not surface insider information and you mustn't trade if you have any.
Because the prediction market community is filled with liars and fraudsters, of course, it does seem to be common knowledge that this restriction isn't meant to be taken seriously, much like Polymarket's fake rule that Americans aren't allowed to use it.
But once you start from the premise that everything prediction markets say about their rules and practices is a lie, why should we believe they provide any genuine signal for anything?
Also, at least on Polymarket, beware of those who can influence the settlement of the wager, which may settle not in concordance with the actual outcome in reality.
Why are we wasting government money cracking down on Polymarket betting? The most offensive thing in this article is the government pretending Polymarket bets are securities. Prediction markets provide no benefit to society and don't need to exist.
Anderson Cooper: But predictive markets do rely on someone having some inside information.
Shayne Coplan: Uh-huh. Yeah. I think that people going and having an edge to the market is a good thing. Obviously, you need to curate them and you need to be really clear and stringent on where the line is drawn and, like, sort of ethics and we spend a lot of time on that. But it's sort of an inevitability that this will happen, and there's a lot of benefits from it. And, you know, people will adapt.
So now the real bet he lost is salary + time for all those years he is going to prision + lower job for decades after prison. This person bet Millions to get $1M basically and lost both, very rare gambling level lost from smart(used to) person. At least normal gambler loses what they have and some debt.
He was Staff-level as well. That's minimum $500k a year or more. And tenure often grows pay disproportionately at Google. That's easily $20 million lost.
I was curious how a man in Switzerland gets charged in the US for a placing bets on a site that doesn't allow the US to participate.
The short answer seems to be that he stole private information from a US company and used that information to enrich himself. And then got that charge enhanced with things like wire fraud and transacting on systems involving US currency.
And another commentor suggests that punishing insider traders in a step towards legitimzing and regulating prediction markets in the US.
Of course he should be punished but the best lesson here is for bettors. Those who wager on "prediction markets": you are betting against people who have access to more information or can influence the outcome of the wager. Don't waste your money.
That's sort of the point of prediction markets: they surface insider information by allowing people to profit off of it. The benefit is to people watching the prices, who can then use that information to make better decisions ahead of the answer being revealed to the public. It's not necessarily to market participants, who need to be aware of who else is trading the market and have a credible reason to believe they have better information.
The unfortunate thing is that, while their academic position sounds plausible on paper, just like with most crypto things it's just a money grab.
How many crypto people (with legitimate backgrounds just like the founders of Polymarket and Kalshi) stood up and said big things about freedom and the unbanked etc., turns out they were literally just scamming people- there are so many examples besides FTX.
Letting people bet on any random thing is not at all related to this "price everything" theory. If that was their real goal they wouldn't behave so much like a normal sports betting company. I have yet to actually hear anyone defend their actual actions in a plausible way.
It barely makes sense, though? The idea is that it will surface insider information to the public. That happens only because the insider is financially incentivized to place a bet. But they will only bet if they can win money, and they can only win money if someone is taking the other side of their bet, which necessarily means someone without their insider information.
In other words, prediction markets require suckers to lose money to insiders in order for the public to learn new information. In this case, people lost over a million dollars to an insider so the public could learn that "d4vd" was searched a lot.
Is this good?
That’s the academic theory behind these markets, but there’s no actual value to knowing who the most searched celebrity will be or any of this other garbage. It’s just an unregulated casino with guesses about the popularity of Google searches instead of guessing black or red.
It’s not rare nowadays that speculation on some topic will include the Polymarket rates. Google searches: Maybe not. Maybe that’s just gambling for the fun of it.
If it's unregulated, how are people getting charged with insider trading?
You are correct, but you say this like the prediction markets are open about this fact. They aren't and if you ask them they will deny this.
I think they are open about it. John Oliver did a piece on it last month and I recall an interview where the founder of one of these prediction markets shared this as a beneficial effect of the product.
Hmm, not following. The insider trade in this case was small enough to not change the lines meaningfully, no? D4vd's chances of being #1 went from <1% to >99% nearly overnight, was a huge upset.
Polymarket might be different, but conventional Vegas-style lines change with the amount of $$ bet, if the pool is $50M and an insider bets $10k on the long shot, the line isn't moving -- I don't see how insider information can be surfaced in this scenario except after the fact (and only maybe then).
In other words, if the line changes enough to signal insider info, it's not really insider info anymore.
Because these markets aren't all that efficient yet (possibly because other potential market participants are scared off by insider trading charges). You don't have multiple people that all have insider information betting against each other, you have one person with insider information that cleans out everybody else. If this repeats enough, all the people without insider information will get cleaned out and exit the market, all the other people with insider information will enter the market for profit, and prices should converge to true likelihood.
And yes, the whole purpose of prediction markets is to turn insider info into public info.
But you just said "The benefit is to people watching the prices" -- but if the odds haven't properly converged what information does watching the prices get you before-the-fact?
Maybe I'm just not getting it, could you lay out a scenario?
The point is to make money by letting people gamble on the future. What you said is a second order effect of doing the first thing. They should at least be regulated under gambling laws, doesnt make sense without it
What Polymarket says on the topic (https://integrity.polymarket.com/) is that they do not surface insider information and you mustn't trade if you have any.
Because the prediction market community is filled with liars and fraudsters, of course, it does seem to be common knowledge that this restriction isn't meant to be taken seriously, much like Polymarket's fake rule that Americans aren't allowed to use it.
But once you start from the premise that everything prediction markets say about their rules and practices is a lie, why should we believe they provide any genuine signal for anything?
The odds have shown to be largely correct, thanks to people profitably arbitraging away inaccuracies.
Also, at least on Polymarket, beware of those who can influence the settlement of the wager, which may settle not in concordance with the actual outcome in reality.
https://www.reddit.com/r/CryptoCurrency/comments/1jki1lj/pol...
The real money is in providing liquidity if you don't have insider knowledge.
Well you either get XKCD 1570 or Jane Street.
https://xkcd.com/1570/
Not much in between. The efficient market hypothesis claims many victims.
This is true of all markets.
NSA employees must be the final boss of this kind of stuff.
That's aweful, only senators should be allowed to do that!
Why are we wasting government money cracking down on Polymarket betting? The most offensive thing in this article is the government pretending Polymarket bets are securities. Prediction markets provide no benefit to society and don't need to exist.
Interesting to see that insider trading is considered illegal after all.
When will the white house insiders see the same fate?
If you worked at Google for 12 years, it seems pretty irrational to commit this kind of crime for only $1M.
Maybe there’s a chance he can get pardoned before 2029 lol
Anderson Cooper: But predictive markets do rely on someone having some inside information.
Shayne Coplan: Uh-huh. Yeah. I think that people going and having an edge to the market is a good thing. Obviously, you need to curate them and you need to be really clear and stringent on where the line is drawn and, like, sort of ethics and we spend a lot of time on that. But it's sort of an inevitability that this will happen, and there's a lot of benefits from it. And, you know, people will adapt.
[1] https://www.cbsnews.com/news/polymarket-ceo-shayne-coplan-on...
“and, like, sort of ethics”
they spent a lot of time on it!
If you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you.
- Paul Newman
So now the real bet he lost is salary + time for all those years he is going to prision + lower job for decades after prison. This person bet Millions to get $1M basically and lost both, very rare gambling level lost from smart(used to) person. At least normal gambler loses what they have and some debt.
He was Staff-level as well. That's minimum $500k a year or more. And tenure often grows pay disproportionately at Google. That's easily $20 million lost.
If he had made less money doing it he probably would have gotten away with it.
Forbes flagged this account back in December and it still took prosecutors months to charge him.
Yes, what did you expect? That’s amazingly fast for federal prosecutors.
Anyone could have run the list of candidate names from the bets through google trends right?
There's an end-of-year Google trends wrapped that the employee pulled off an internal system before it was public.
[dupe] https://news.ycombinator.com/item?id=48301808
So they hanged a nobody while the person who made even more with white house insider trading announcements by the president goes scotch free?