The U.S. Commodity Futures Trading Commission (CFTC) has raised significant concerns about manipulation on prediction markets, particularly in light of recent events involving Kalshi.
CFTC Concerns
The CFTC filed a new document with the U.S. Court of Appeals for the D.C. Circuit, arguing that prediction markets, which allow traders to bet on future events, are highly susceptible to manipulation. These concerns come amid a surge in election-related betting, which the CFTC suggests could undermine public trust and the integrity of the electoral process.
Case with Polymarket
The CFTC highlighted these concerns with recent attempts to manipulate markets on Polymarket, where traders bet on Vice President Kamala Harris winning the 2024 presidential election. The commission's filing contends that such manipulative attempts could distort market predictions and affect public perception of election outcomes.
CFTC Order to Kalshi
On September 12th, the CFTC also addressed procedural matters in the case, requesting an order from the district court on September 6th be stayed pending further review. The administrative stay is intended to provide the court time to consider an emergency motion and does not reflect a decision on the underlying merits of the appeal. The CFTC ordered Kalshi to suspend its election prediction market as part of its broader concerns about potential manipulation risks within prediction markets. The regulatory body warns that such markets could undermine public trust in election processes, citing recent attempts to manipulate political betting outcomes. The order requires Kalshi to cease all election-related contracts until further notice.
The CFTC's actions reflect heightened scrutiny over the integrity of prediction markets amid growing concerns about their impact on public perception and electoral fairness.
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