During the CFTC Innovation Advisory Committee meeting today, there was an interesting exchange between CME Group CEO Terry Duffy and CFTC Chairman Mike Selig.
Duffy expressed his support for the crypto industry, something they have participated in since 2017, as well as artificial intelligence, utilized correctly, but worried about prediction markets and listings that are open to abuse.
“There’s a lot of things that are susceptible to manipulation,” stated Duffy, mentioning specifically the Maduro case and the Teleprompter case when insiders participated in contracts with the objective of benefiting from access to inside information.
“This is not good for our industry. It is horrible for our industry”
“We are not a bunch of carnival barkers at a circus”
The “Teleprompter Case” refers to an investigation into former White House teleprompter operator Gabriel Perez, who had access to speech drafts and last-minute edits, with a listing hosted on Kalshi. Reports indicate that, over time, Perez accumulated tens of thousands of dollars through his insider vantage point.
The Maduro case is similar. Hours before the “arrest” of former Venezuelan President Nicholas Maduro, a newly created account placed wagers on Polymarket to financially benefit from the information. Polymarket flagged the activity and reported it to authorities.
Chairman Selig countered that these events happened offshore and were therefore “fake news.” Duffy responded, “We can get into a back and forth; I am happy to do that too.”
Duffy also asked about sports contracts that he believes cross the lines which are available in the US. He mentioned the Nathan’s Famous Hot Dog eating contest and a computer contract as well.
Duffy went on to ask what the Commission was doing about users leveraging a VPN to access contracts that otherwise may not be available in the US.
The overall point is the prediction market industry should be better at policing offerings that may be open to manipulation and abuse. It was an interesting discussion that highlights the intrinsic friction between fast-moving innovators and establishment financial platforms. Change can be messy at times.
The portion of the video is available to view below.
