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AI Spies on Speculators

Can predictive markets ever be truly fair, or are they just a casino for insiders?

The US Commodity Futures Trading Commission is deploying AI to sniff out insider trading on prediction market platforms like Polymarkets. As virtual networks hide traders’ true identities and locations, the agency is turning to automation to monitor suspicious behavior.


“You’ve got so much data,” says CFTC chairman Michael Selig. “When we feed it into AI, we get really great information.” The agency’s arsenal includes everything from blockchain tracing tools like Chainalysis to market abuse detection software such as Nasdaq Smarts.


In the wake of significant backlash over suspected insider trading, Polymarkets have started touting their efforts to catch sketchy bettors. This comes amid intense scrutiny on prediction markets, with lawmakers calling for stricter regulations and an end to morally obscene trades related to military actions.


“We’re surveilling the markets on a global basis,” says Selig. “Extraterritorial jurisdiction is used in extreme circumstances.” The 2010 Dodd-Frank Act gives the CFTC more authority over foreign swap activities that impact the US, but this also comes with challenges to its legal standing.


For now, only one man has been charged with insider trading. But Selig remains optimistic: “The agency will identify wrongdoers—no matter how large or how small.”

Original source:  https://www.wired.com/story/polymarket-insider-trading-cftc-michael-selig-interview/
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