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March 11, 2013 2:27 am
Intrade, the popular online prediction market that was forced to cut off its largest customer base following a US government crackdown, has halted all trading activity and frozen customer accounts pending an investigation into its business.
The Dublin-based company said in a notice on its website late on Sunday that recently discovered “circumstances”, on which it did not elaborate, would be subject to an investigation and could uncover potential “financial irregularities”.
The move comes three months after the US Commodity Futures Trading Commission sued to stop the company from offering prediction contracts to Americans, who were the most active users of the site. Intrade made no mention of that case in its notice.
To comply with Irish law, the company said it had ceased all trading, settled open positions at fair value and halted all banking transactions.
“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,” the company’s board said in the notice late on Sunday.
An Intrade official could not immediately be reached for comment.
The number of visitors to the Intrade site has plummeted in the wake of the CFTC lawsuit, leading even boosters to question the predictive value of its markets. Bettors on Intrade entered contracts that paid $10 for correctly guessing the outcome of events from elections to the Academy Awards. Academics and journalists toasted the site as a novel way to divine the wisdom of crowds.
As of early Sunday, wagers on the identity of the successor to recently resigned Pope Benedict XVI were among Intrade’s most popular markets. A total of 52,166 unique trades had occurred since January 1, compared with 1m in all of 2012, data published on the site showed.
After the suit was filed in November 2012, Intrade had said it hoped to reopen inside the US. The CFTC case is pending in a federal court in Washington.
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