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Blockchain.com files for CFTC licenses to offer U.S. derivatives and prediction markets

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Blockchain.com’s push into U.S. prediction markets and crypto derivatives hinges on two new regulatory licenses that would let it compete directly with established players like Coinbase and Crypto.com. The company’s move coincides with its imminent public debut and reflects a broader shift by crypto platforms to capture the derivatives and event-contract boom.

  • Blockchain.com filed for designated contract market and futures commission merchant licenses with the CFTC to offer event contracts and derivatives to U.S. customers.
  • Twelve companies have sought DCM approval this year, with the CFTC approving six new designated contract markets in 2026.
  • The company confidentially submitted its IPO filing in May and targets a $4 billion to $6 billion valuation for a public debut this year.
  • 2 CFTC license types sought by Blockchain.com for U.S. regulatory approval
  • 12 companies filing for DCM licenses in 2026 through the filing deadline
  • $4B-$6B Target valuation range for Blockchain.com’s public offering this year
  • 95M Wallets connected to Blockchain.com since its founding in 2011

CNBC reported that Blockchain.com has filed for two distinct regulatory licenses with the Commodity Futures Trading Commission to expand its U.S. product offering. The company seeks designation as both a futures exchange, formally known as a designated contract market, and as a futures commission merchant, which would permit it to act as a broker for derivatives contracts. The twin applications position Blockchain.com to serve retail and institutional traders in the event-contract and digital-asset derivatives markets.

Blockchain.com seeks unified trading environment across derivatives and prediction markets

Peter Smith, CEO and co-founder of Blockchain.com, said the company wants to create a streamlined platform where users can manage digital assets, trade derivatives, and take positions on real-world events without switching between separate applications. The filing reflects a broader industry trend in which crypto platforms are integrating prediction markets, perpetual futures, and event contracts into single interfaces to reduce friction for traders.

Blockchain.com already operates prediction markets through a partnership with Polymarket and offers perpetual futures powered by Hyperliquid to international customers. The CFTC filing would extend these offerings to U.S. markets under a formal regulatory framework. Competing platforms have moved aggressively into this space: Crypto.com and Gemini Space Station run their own event-contract marketplaces, while Coinbase offers event contracts primarily through a partnership with Kalshi.

Twelve companies vie for CFTC approval as derivatives regulation opens new pathways

Blockchain.com is one of twelve companies that filed for designated contract market licenses during 2026, according to CFTC filings. The regulator has approved six new DCMs this year alone, signaling a willingness to expand the number of platforms permitted to offer derivatives and event contracts. The approval of multiple new platforms suggests the CFTC views regulated competition in this space as beneficial to market development.

Kalshi and Polymarket, two specialized platforms focused on prediction markets, have also launched perpetual futures contracts to serve U.S. and international customers respectively. The convergence of prediction-market and derivatives trading suggests regulatory acceptance of bundled products, provided they are offered through licensed entities.

IPO timeline and valuation coincide with regulatory push for expansion

Blockchain.com’s CFTC applications arrive as the company prepares to go public.

The company confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission in May 2026. Bloomberg reported in September that Blockchain.com targets a valuation between $4 billion and $6 billion for its initial public offering later this year. The timing positions regulatory approval of U.S. derivatives licenses as a potential catalyst for the offering, since expanded access to U.S. markets would increase the company’s addressable revenue base.

According to the company’s SEC filing, Blockchain.com has built trust among more than 95 million wallets and over 43 million verified users since its 2011 founding, and has facilitated over $1.1 trillion in total crypto transactions.

The BlockWest read. Regulatory approval of these licenses would reshape how institutional capital flows through crypto derivatives markets. Blockchain.com’s public valuation already prices in some expectation of U.S. market access, but the CFTC’s actual approval timeline remains uncertain. Investors should watch whether approval arrives before or after the IPO closes, since delayed regulatory clarity could compress the initial trading premium if institutional buyers view U.S. derivatives access as a material revenue driver.

The CFTC has not announced a timeline for reviewing Blockchain.com’s applications. The company targets a 2026 IPO completion, though the Securities and Exchange Commission’s review process, combined with CFTC regulatory scrutiny, could delay either milestone. Market participants should monitor the CFTC’s published docket for action on the Blockchain.com filings and watch for any statements from the agency signaling its stance on the growing volume of DCM license requests.

Congress expands insider trading probe to three crypto platforms

Congress expands insider trading probe to three crypto platforms

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Congress is expanding its insider trading investigation across prediction market platforms, adding three major crypto and derivatives exchanges to an existing probe that has already ensnared two platforms. This escalation signals lawmakers’ concern that trading safeguards across the sector remain inadequate to prevent bad actors from exploiting nonpublic information.

  • House Oversight Chairman James Comer sent letters to Hyperliquid, Crypto.com, and PredictIt owner Aristotle Exchange on Tuesday.
  • A Hyperliquid trader placed a $1.1 billion short in Bitcoin and Ether one minute before Trump’s October 10, 2025 tariff announcement, profiting over $150 million.
  • The investigation now spans five platforms total, following a U.S. Army officer’s alleged use of classified information to profit about $400,000 on Venezuelan political bets.
  • $1.1B Short position placed minutes before nonpublic Trump tariff announcement on Hyperliquid
  • $150M+ Profit generated from the tariff-timed short as leveraged positions collapsed
  • $400K Proceeds from alleged insider trading by U.S. Army Master Sergeant Gannon Ken Van Dyke
  • 80+ Polymarket users identified with suspiciously timed bets

BeInCrypto reported that House Oversight Chairman James Comer has opened a formal investigation into three additional prediction market and crypto trading platforms over suspected insider trading activity. The move expands a probe that the House Committee on Oversight and Government Reform already initiated in May 2025 targeting Polymarket and Kalshi. Comer’s latest letters, sent Tuesday, are directed at Hyperliquid, Crypto.com, and PredictIt operator Aristotle Exchange, bringing the total number of platforms under Congressional scrutiny to five.

A $1.1 billion short placed one minute before Trump’s tariff announcement

The catalyst for the expanded probe centers on a single, precisely timed trade. On October 10, 2025, President Trump posted that China would face 100% tariffs. Minutes before that announcement became public, a Hyperliquid trader had already placed a massive short position worth approximately $1.1 billion in Bitcoin and Ether, according to an Investing.com analysis tracked by Comer.

The wallet in question added to the short one minute before Trump’s post went live. As the tariff news roiled markets, $19 billion in leveraged bets were wiped out, and the short position generated more than $150 million in profits. On-chain analysts linked the wallet to Garrett Jin, a former BitForex CEO, who denied engaging in insider trading and said he had traded on behalf of a client.

This transaction, precisely timed to a nonpublic government decision, executed on a platform with apparently no identity verification or mechanism to refer the responsible party to U.S. law enforcement, mirrors a pattern of insider trading the Committee is investigating across the prediction market sector.

James Comer, House Oversight Committee Chairman, in a letter excerpted by CNBC

Congress demands identity verification and suspicious trade monitoring from five platforms

Comer’s letters to all five platforms request detailed information about Know Your Customer identity checks, geographic enforcement mechanisms, and procedures for detecting anomalous trading activity. Kalshi and Polymarket have already submitted nearly 1,000 documents in response to the earlier investigation.

The investigation reflects a growing pattern of abuse across the sector. A New York Times investigation identified more than 80 Polymarket users who placed bets timed suspiciously close to undisclosed events. Most seriously, a soldier was charged in April with using classified information about Operation Absolute Resolve–the operation that led to Venezuelan President Nicolas Maduro’s capture–to place wagers that generated about $400,000 in profits.

“As online prediction platforms grow and become more mainstream, some bad actors have exploited the platforms to make thousands of dollars by placing bets based on nonpublic information,” Comer said.

What the five platforms must now disclose to Congress

Crypto.com operates a regulated prediction market arm allowing U.S. users to bet on politics, sports, and economic outcomes. PredictIt has offered political wagers since 2014. Neither platform has yet been required to respond to Congressional requests, unlike Kalshi and Polymarket, which have already handed over substantial documentation.

The Committee’s formal letters ask each platform to explain how it verifies the identities of domestic and foreign account holders, enforces geographic restrictions on users, and monitors for suspicious trading patterns. The documents do not specify a deadline for response, leaving unclear when Congress expects to receive materials or issue subpoenas if platforms decline to cooperate voluntarily.

The BlockWest read. The common thread across all five platforms is the absence of meaningful friction between nonpublic government information and betting contracts. Comer’s focus on identity verification and anomaly detection treats the symptom, not the disease: prediction markets that settle on government decisions will attract those with access to advance word. The real question is whether any platform can credibly detect insider trading when the timing itself is the only telltale sign.

Comer has not announced a deadline for the three newly targeted platforms to respond, and it remains unclear whether the Committee will pursue subpoenas or formal compulsion if Hyperliquid, Crypto.com, and Aristotle Exchange decline to cooperate.

Kalshi denies receiving contact from CFTC over trading patterns

Kalshi denies receiving contact from CFTC over trading patterns

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Kalshi is pushing back on reports that it faces regulatory scrutiny over trading patterns on its bitcoin and ether prediction markets, saying the Commodity Futures Trading Commission has not opened any formal examination. The dispute centers on nearly one million ether trades placed in similar amounts, which Kalshi attributes to a routine liquidity incentive program rather than manipulation.

  • Kalshi spokesperson Elisabeth Diana said the company has not been contacted by the CFTC and believes no formal examination exists.
  • The Wall Street Journal reported the CFTC was reviewing Kalshi trading data before deciding whether to open an enforcement investigation.
  • Researcher Beni found $5,500-sized trades made up 48% to 58% of notional ether perpetual volume on four days in September.
  • $539M Kalshi ether perpetual 24-hour volume versus $3.1M open interest
  • $5,500 trade size that dominated ether perpetual notional volume, per Beni
  • 48-58% share of notional volume from identical $5,500 trades, four days in September
  • ~1M ether market trades placed in similar amounts, per WSJ report

Kalshi said it has not heard from the CFTC and does not believe the agency has launched a formal probe into its trading activity, according to reporting by CoinDesk. The statement came after the Wall Street Journal reported that the CFTC was examining Kalshi trading data before deciding whether to open an enforcement investigation. The CFTC declined to confirm whether such a review was underway.

Kalshi Denies Formal CFTC Examination

Elisabeth Diana, a Kalshi spokesperson, said the company sends trading data to the CFTC as a matter of course and sees nothing unusual in the agency looking at it.

We have not been contacted by the CFTC and don’t believe there is any formal examination.

Elisabeth Diana, Kalshi spokesperson

Diana said the trading patterns drawing attention are “typical of liquidity incentive programs and common in financial markets.” Such programs pay participants for providing liquidity, often producing bursts of similarly sized orders that can look uniform from the outside.

Diana added that Kalshi routinely shares data with the regulator. “We send our data every day to them [the CFTC], and it’s not that weird for them to sort of review our data on the regular,” she said. Asked directly about wash trading protections, Diana said Kalshi has “tons of tools” and a “full surveillance team in place.” Wash trading refers to transactions structured to create the appearance of market activity without any real change in economic exposure.

Beni’s Data Shows $5,500 Trades Dominating Ether Perp Volume

CoinDesk reported early Tuesday that a majority of trading volume on Kalshi’s bitcoin and ether perpetual markets consisted of identically sized trades, many ether perpetual trades clustered near $5,500 and bitcoin perpetual trades near $2,500 or $5,000. The Journal’s later report added that the CFTC was reviewing nearly one million ether trades placed in similar amounts before deciding whether to escalate to a formal investigation.

Beni, a co-founder of research firm Stealth Neolab, first flagged the pattern. He said Kalshi’s ether perpetual market recorded about $539 million in 24-hour trading volume against just $3.1 million in open interest, a gap he found notable.

Beni later found that trades of exactly $5,500 accounted for 48% to 58% of notional volume on four separate days in September. He said the figures came from Kalshi’s public API. Kalshi has not disputed Beni’s underlying numbers, only his interpretation of what they mean.

CFTC Declines Comment as Prediction Market Scrutiny Grows

The CFTC had not returned a request for comment sent Tuesday, according to CoinDesk. The agency also declined to confirm to the Journal whether it was formally investigating Kalshi.

The scrutiny arrives as prediction markets expand rapidly, drawing closer attention to how platforms report volume and police trading between participants. Diana pushed back on unverified claims spreading online, saying “don’t believe everything you read on X” and adding that “a lot of the discourse was rumors seeded by competitors.”

The BlockWest read. The real question is not whether the CFTC has opened a formal file, but whether Kalshi’s own surveillance team can produce data reconciling $539 million in reported volume against $3.1 million in open interest before the agency asks. Institutional counterparties weighing exposure to Kalshi’s derivatives markets will watch that reconciliation more closely than any denial of contact with regulators.

The CFTC has not said whether its review of Kalshi’s data will proceed to a formal enforcement investigation, and it did not respond to requests for comment from either CoinDesk or the Journal. Kalshi has not published the surveillance data or methodology Diana referenced, leaving Beni’s API-derived figures as the only detailed public account of the trading pattern so far.

CFTC warns prediction market operators that mention contracts carry manipulation risks.

CFTC warns prediction market operators that mention contracts carry manipulation risks.

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The Commodity Futures Trading Commission has told prediction market operators that contracts betting on what a specific person will say carry manipulation risks unlike other event markets. The warning does not ban Kalshi and Polymarket-style “mention markets,” but it puts operators on notice that these products face a steeper regulatory bar going forward.

  • CFTC’s Division of Market Oversight issued the advisory on Tuesday, targeting “mention market” contracts.
  • The agency said such contracts are “presumptively readily susceptible to manipulation” because outcomes depend on one person’s conduct.
  • Kalshi has already issued a lifetime trading ban to former Rep. George Santos over bets tied to his own State of the Union appearance.
  • Sep 22 date CFTC’s market oversight division issued the mention markets warning
  • 9302-26 CFTC release number identifying the new staff advisory
  • 9289-26 release number for the order penalizing an ex-Trump teleprompter operator’s bets
  • Reg 40.3 filing rule exchanges must satisfy to list new mention contracts

The Commodity Futures Trading Commission moved this week to narrow one of the fastest-growing niches in event trading: contracts that pay out based on whether a named individual utters a particular word or phrase. According to CoinDesk reporting, the agency’s advisory stops short of a ban but signals that mention contracts on platforms such as Kalshi and Polymarket will need to clear a higher design bar than typical event markets tied to economic data or election results.

CFTC Advisory Flags ‘Discrete Conduct’ Risk In Mention Contracts

The advisory, issued Tuesday by the CFTC’s Division of Market Oversight, addresses contracts based on whether a person will “say or mention certain words, attend or appear at an event, or otherwise interact with another person.” Unlike markets settled by “independently generated, externally verifiable outcomes that are outside the control of any single person,” the agency wrote, mention markets turn on “the discrete conduct of a named person, and that conduct may be neither independently generated nor externally verifiable.”

That distinction matters because the person whose words are being wagered on, or people close to them, could shift the outcome using inside knowledge of the bet itself. The CFTC’s staff advisory said such contracts should be treated as “presumptively readily susceptible to manipulation.”

The advisory reminds designated contract markets of their Core Principle 3 obligation to list only contracts “not readily susceptible to manipulation,” and it directs operators to provide complete, contract-specific analysis when filing new mention products under Commission Regulations Sections 40.2 or 40.3.

Kalshi’s Trump UN Mention Market Sits Alongside Past Enforcement Cases

The advisory does not order any single platform to pull a product, but it lands against the backdrop of live contracts like Kalshi’s market on whether President Donald Trump would use particular language during his United Nations remarks. That contract illustrates precisely the category the CFTC now says warrants extra scrutiny before listing.

The agency has already brought at least one enforcement action in this space. It penalized a former White House teleprompter operator for Trump under an order covering bets placed on remarks the operator knew the president was planning to deliver.

Kalshi, separately, has taken its own disciplinary step. The exchange issued a lifetime trading ban to former U.S. Representative George Santos after accusations that he wagered on his own State of the Union appearance.

What Exchanges Must Show Before Listing New Mention Bets

The CFTC’s advisory lays out non-exhaustive design factors that could help a mention contract clear Core Principle 3, with “independent verifiability and substantial public scrutiny” described as essential attributes. Platforms are expected to weigh and disclose those factors directly in their Part 40 filings rather than treat mention contracts like standard event markets.

The advisory does not set a compliance deadline or say whether existing contracts must be refiled. That leaves open whether Kalshi, Polymarket and other operators will need to resubmit currently listed mention products under the tighter standard.

The BlockWest read. We read this as a compliance mandate more than a ban, one that shifts manipulation liability onto exchange risk and legal teams rather than the CFTC itself. Kalshi and Polymarket now carry the burden of documenting independent verification for every mention contract before filing, raising legal and design costs for a product line that has driven high-traffic bets around presidential speeches and campaign events.

The CFTC’s advisory leaves unresolved whether operators must amend contracts already trading, including Kalshi’s Trump UN market, or only apply the tighter standard to future Part 40 filings under Sections 40.2 and 40.3. How Kalshi and Polymarket respond in their next contract submissions will show whether platforms treat the advisory as a formality or a genuine constraint on what mention markets they bring to market next.

Robinhood CEO says crypto event contracts are outpacing sports wagers on its platform

Robinhood CEO says crypto event contracts are outpacing sports wagers on its platform

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Robinhood Chairman and CEO Vlad Tenev says crypto based event contracts are already taking an outsized share of the company’s prediction markets business, and he expects sports wagers to become the minority category within a few years. The claim lands as sports linked contracts face mounting lawsuits from New York and Baltimore, leaving crypto contracts to grow with far less legal friction.

  • Vlad Tenev told CNBC’s Jim Cramer that crypto event contracts already take a disproportionate share of Robinhood’s prediction markets volume
  • New York sued Kalshi in July seeking more than $36 billion in damages and a nationwide ban on its event contracts
  • Robinhood and market maker Susquehanna formed a joint venture to acquire crypto exchange MIAXdx, formerly known as LedgerX
  • $36B+ in damages New York is seeking from Kalshi over event contracts
  • 9B event contracts traded on Robinhood over the past year
  • Jul when New York filed suit seeking a nationwide Kalshi ban
  • Nov 2025 when the Robinhood-Susquehanna deal for MIAXdx was reported

Speaking on CNBC’s “Mad Money” with Jim Cramer, according to reporting by BeInCrypto, Tenev said crypto contracts are outpacing sports wagers inside Robinhood’s own platform.

Prediction markets have become one of the fastest growing corners of US trading over the past year. CME, Kalshi, Coinbase and decentralized platforms are all competing for a share of the boom.

Crypto linked contracts have expanded alongside them, largely outside the sports betting litigation now working through the courts. That has given Robinhood’s newest product line room to grow quickly while its rivals fight legal battles over sports contracts.

Tenev Tells CNBC Crypto Contracts Are Taking a Disproportionate Share

Tenev pushed back on the idea that event contracts, yes or no trades on the outcome of a future event, are simply a rebrand of sports betting.

We’re already seeing other categories like crypto taking a disproportionate share. And I think within a few years, sports will actually be in the minority.

Vlad Tenev, Chairman and CEO, Robinhood

Sports linked event contracts have become the most contested corner of the prediction markets business. New York sued Kalshi in July seeking more than $36 billion in damages and a nationwide ban on its event contracts. Baltimore separately sued Kalshi and Polymarket over what the city calls unlicensed sportsbooks.

New York City’s council has also opened its own inquiry into how Kalshi, Polymarket, Coinbase and Gemini Titan market prediction contracts to residents. Crypto linked event contracts have so far avoided that scrutiny, leaving the category more room to grow while sports contracts work through the courts.

Susquehanna Deal For MIAXdx Signals Robinhood’s Next Move

Tenev’s comments track moves already underway at Robinhood. The company formed a joint venture with market maker Susquehanna to acquire crypto exchange MIAXdx, formerly LedgerX, according to Front Office Sports, with plans to build dedicated prediction market infrastructure of its own.

Robinhood has called prediction markets its fastest growing revenue line. The company says roughly 9 billion event contracts have traded on its platform over the past year.

Tenev frames the strategy as part of a broader “ownership” push he has also used to justify Robinhood’s retirement account matching program and its expansion into tokenized stocks. The MIAXdx deal gives that push its own regulated exchange rather than relying solely on third party venues.

Whether Crypto Overtakes Sports On Tenev’s Timeline Remains Unverified

Tenev’s forecast that sports contracts fall into the minority within a few years has not been confirmed by any independent data cited in his CNBC appearance. Robinhood has not disclosed a breakdown of how much of its 9 billion event contracts traded over the past year came from crypto versus sports categories.

The legal fights working through the courts in New York and Baltimore involve Kalshi and Polymarket rather than Robinhood directly, but their outcomes will shape how much room sports contracts have to compete going forward. Neither Kalshi nor Polymarket’s response to the lawsuits is represented in this reporting.

The BlockWest read. Robinhood’s push into crypto contracts looks less like a bet on crypto’s popularity and more like a hedge against the legal risk piling up around sports wagering. By building its own exchange through the MIAXdx deal, Robinhood positions itself to route volume away from categories tangled in litigation, giving shareholders exposure to prediction markets without the courtroom exposure that Kalshi and Polymarket currently carry.

Robinhood has not announced a launch date for the prediction market infrastructure it plans to build on MIAXdx, and the New York and Baltimore lawsuits against Kalshi and Polymarket remain unresolved. Investors will be watching whether Robinhood’s crypto contract volume overtakes sports before those cases reach a verdict.

Prediction Markets Experience 35% Drop in Polymarket Activity Following World Cup Conclusion

Prediction Markets Experience 35% Drop in Polymarket Activity Following World Cup Conclusion

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Polymarket’s trading volume dropped sharply in August as the summer surge driven by World Cup betting faded, while its larger rival Kalshi proved more resilient to seasonal slowdowns. The divergence underscores structural differences between the two platforms and raises questions about prediction markets’ ability to sustain momentum outside major events.

  • Polymarket’s August volume fell to $8.41 billion, a 35% decline from July’s $12.89 billion.
  • Kalshi closed August at $38.67 billion, down only 4% from July’s $40.1 billion, now processing roughly five times Polymarket’s monthly volume.
  • A $1 billion funding round valued Polymarket at $21 billion despite the volume decline, suggesting investor confidence in the sector’s long-term prospects.
  • 35% Polymarket’s August volume decline compared to July
  • $21B Polymarket’s new valuation following $1 billion funding round
  • $5.6B Peak daily prediction market volume during World Cup tournament
  • 3M+ Active users on Polymarket platform as of August

Polymarket’s trading slump in August exposed the prediction markets industry’s sensitivity to major sporting events. Data compiled by The Block showed Polymarket’s combined volume, which includes its core platform and the separate Polymarket US product, dropped from $12.89 billion in July to $8.41 billion in August. The core platform absorbed most of the decline, falling from $7.89 billion to $4.59 billion, while Polymarket US fell more modestly from $5 billion to $3.82 billion.

The pullback reflects a broader cooldown that began after the World Cup’s conclusion. Earlier in the summer, prediction markets experienced a dramatic surge driven by sports betting interest. Volume climbed from approximately $65 million at the start of July to a peak of $5.6 billion by July 22, with football matches attracting waves of first-time users across multiple platforms. That peak proved unsustainable once the tournament ended.

Prediction markets have historically struggled with user retention once major events conclude. The World Cup’s global reach and four-week tournament structure created an ideal environment for introducing casual bettors to the platforms. However, maintaining engagement between major sporting competitions has consistently proven challenging for the industry. Without the draw of high-profile events, many users who opened accounts during the tournament appear to have stopped actively trading.

Kalshi’s Steady Performance Widens Gap With Polymarket

Kalshi demonstrated far more resilience to post-tournament declines than its rival. The platform closed August at $38.67 billion, representing only a 4% decrease from July’s $40.1 billion. This contrasts sharply with Polymarket’s sharper descent and reflects either a more diversified user base, different market offerings, or stronger retention of casual traders attracted during the World Cup period.

The volume gap between the two platforms has widened considerably. Kalshi now processes close to five times Polymarket’s monthly trading volume based on the same measurement period. Separate tracking by Predictefy offered a slightly different snapshot, showing Polymarket at $3.8 billion versus Kalshi’s $11.28 billion for the 30-day period, though the directional finding remained consistent: Kalshi significantly outpaced Polymarket in August traffic.

Kalshi’s relative stability may stem from its broader market offerings beyond sports betting. The platform, which operates under CFTC regulation as a designated contract market, offers markets on economic indicators, political events, and other non-sports topics. This diversification provides consistent trading activity independent of the sports calendar. By contrast, Polymarket’s user base appears more heavily concentrated in sports betting during peak seasons.

Industry-wide volume has continued to decline in September, with DeFiLlama data showing weekly volume across prediction markets running around $4 billion, well below the pace sustained during the tournament.

Investor Confidence Remains Strong Despite Trading Slowdown

The sharp volume decline has not dampened venture capital interest in the sector. Donald Trump Jr.’s investment firm, 1789 Capital, led a $1 billion funding round that valued Polymarket at $21 billion, representing a 40% increase from its roughly $15 billion valuation earlier in 2024. The funding suggests investors view the volume decline as cyclical rather than indicative of fundamental weakness in the prediction markets opportunity.

Polymarket retains a substantial user base despite the trading slowdown. The platform counts more than 3 million users, providing a foundation for future volume growth if market conditions shift or new events spark trading activity. The scale of this user base represents years of marketing investment and positions Polymarket well for future expansion, particularly if upcoming political events or other major developments renew interest in prediction markets.

The funding round reflects broader confidence in prediction markets as an emerging asset class. Investors have increasingly recognized the potential for these platforms to capture market share from traditional betting operators and financial derivatives exchanges. The space has attracted attention from established financial institutions and venture capital firms betting on long-term growth despite short-term volatility.

Regulatory Challenges Loom Over Growth Prospects

However, regulatory headwinds continue to threaten both platforms’ operating ability. Baltimore filed suit against both Kalshi and Polymarket last month, arguing they operate unlicensed sports betting businesses. Kalshi faces additional legal challenges from New York Attorney General Letitia James, prompting the CFTC to invoke emergency powers to allow the platform to continue operating in the state.

These legal battles create uncertainty about the industry’s long-term viability. Different regulatory interpretations across states could fragment the market or force platforms to restrict service to specific jurisdictions. The outcome of these cases will likely determine whether prediction markets can consolidate their growth or face fragmented, restricted operations.

As prediction markets navigate the transition from event-driven volatility to more stable baseline trading patterns, investors and regulators will watch whether platforms can maintain user engagement during slower periods and whether ongoing litigation alters the competitive landscape between Polymarket and Kalshi.

Former White House official converts confidential speech manuscript into $107,000 through prediction market trades until regulatory agency intervenes

Former White House official converts confidential speech manuscript into $107,000 through prediction market trades until regulatory agency intervenes

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A White House teleprompter operator traded on advance knowledge of presidential speeches in prediction markets, generating over $107,000 in profits before regulators intervened. The case underscores the tension between prediction markets’ growing mainstream adoption and their vulnerability to insider information abuse.

  • Gabriel Perez, a White House teleprompter operator, traded presidential mention contracts between December 2025 and February 2026 using advance text access.
  • The CFTC ordered Perez to disgorge $107,539.02 in profits, pay a $65,000 civil penalty, and accept a three-year trading ban.
  • Kalshi’s surveillance team flagged and referred the trades to the CFTC, but the exchange’s detection came after profits were already realized.
  • $107,539.02 in prediction-market profits that Perez generated through insider trading activity
  • $65,000 civil monetary penalty imposed, substantially reduced due to Perez’s cooperation
  • 3 years trading ban duration imposed as part of the administrative settlement

Gabriel Perez, employed as a White House teleprompter operator, exploited access to presidential speech texts to trade contracts on prediction market Kalshi that settled based on whether the President would use specific words or phrases during speeches. Between December 2025 and February 2026, Perez converted this material nonpublic information into more than $107,500 in profit, according to a Commodity Futures Trading Commission settlement order released this month. The case marks a high-profile enforcement action against insider trading in prediction markets at a moment when these platforms are expanding into mainstream finance.

Prediction markets have gained increasing legitimacy and visibility in recent years, with platforms like Kalshi operating as regulated derivatives exchanges under CFTC oversight. These markets allow participants to buy and bet on the outcomes of future events, from election results to corporate earnings announcements, with contract prices theoretically reflecting collective probability assessments. The Perez case represents the first major enforcement action against insider trading within this rapidly growing segment of financial markets.

How Advance Speech Access Created an Unfair Trading Edge

Perez’s position as teleprompter operator gave him knowledge of prepared presidential remarks before delivery, fundamentally distorting the risk calculation for traders betting on word or phrase usage. Other market participants were pricing the probability that a phrase would be spoken based on publicly available information and market sentiment. Perez, by contrast, already possessed the text that would determine whether the contract settled in his favor, eliminating the uncertainty that legitimate traders face.

The mechanics of such insider trading in prediction markets differs from traditional securities insider trading, but the underlying principle remains identical. While insider traders in stock markets exploit advance knowledge of corporate events, Perez exploited advance knowledge of a specific public event that had already been authored but not yet delivered. His informational advantage was complete and cost-free.

The CFTC determined that Perez misappropriated this material nonpublic information in breach of a duty of trust and confidence owed to his employer, the White House, establishing a legal foundation for enforcement action.

Kalshi’s Surveillance Flagged Trades, But After Profits Mounted

Kalshi’s compliance and surveillance team flagged and investigated the suspicious trading activity, then referred it to the CFTC. The exchange was credited for its assistance in the regulatory settlement, though the CFTC’s official release does not disclose the detailed timing of Kalshi’s review, investigation, or referral to regulators. This sequence reflects the divided enforcement landscape: exchanges maintain independent surveillance duties, while the CFTC retains authority to investigate and prosecute violations.

The settlement outcome shows both coordination and latency in the enforcement chain. Kalshi detected anomalous activity and escalated it appropriately, yet the detection occurred only after Perez had completed his profitable trading period and realized the full $107,539.02 gain. The CFTC subsequently ordered Perez to disgorge all profits and imposed a $65,000 civil penalty, with the penalty amount reduced substantially in recognition of Perez’s exemplary cooperation with investigators.

Regulatory policy on insider trading penalties typically aims to eliminate the economic benefit of violations while imposing additional sanctions to deter future conduct. The combination of profit disgorgement plus a substantial civil fine is standard CFTC enforcement practice for significant violations. Perez’s decision to cooperate likely spared him from more severe consequences, including potential criminal referral or significantly larger penalties.

Kalshi’s New Controls Target Future Insider Trading But Came Too Late

In June, Kalshi announced new risk-scoring systems for markets flagged as having heightened insider or manipulation risk, employment verification for certain participants, and expanded whistleblower tools. These measures were designed to move surveillance and policing ahead of trades rather than after profits are realized. However, all of these controls were implemented after Perez’s December-to-February trading window, and available sources do not establish whether they would have prevented his activity had they been in place earlier.

The employment verification requirement appears particularly relevant to the Perez case. Had Kalshi required users to disclose employment in sensitive positions with access to material nonpublic information, the exchange might have identified Perez and implemented heightened monitoring on his accounts. Such disclosure requirements are common in traditional securities brokerages but have been slower to develop in prediction markets, which have historically prioritized accessibility and low friction for users.

The broader challenge facing prediction market platforms involves balancing regulatory compliance and fraud prevention against market accessibility. Excessive friction and disclosure requirements could reduce participation and market liquidity, particularly among retail traders. Insufficient safeguards expose the platform to enforcement action and reputational damage, as the Perez case demonstrates.

The Perez settlement confirms that prediction markets attract enforcement attention for insider trading, but leaves unresolved whether current safeguards are sufficiently timely or robust to prevent similar violations. Regulators and exchanges will face continued pressure to demonstrate that surveillance and preventive controls can stop prohibited trades before execution rather than after settlement. As prediction markets continue to mature and expand their market coverage, the accuracy and timeliness of compliance systems will become increasingly critical to maintaining regulatory approval and public trust.

Kalshi Accidentally Sent $18.6 Million to Wrong Winners Before Michigan Reversed Course Unexpectedly

Kalshi Accidentally Sent $18.6 Million to Wrong Winners Before Michigan Reversed Course Unexpectedly

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Kalshi’s premature settlement of a college football market exposed critical vulnerabilities in prediction market infrastructure at a moment of heightened regulatory scrutiny. The incident raises questions about how automated systems can reliably settle markets tied to real-world events, particularly when those events involve disputed officiating decisions.

  • Kalshi incorrectly settled a Western Michigan versus Michigan football market, initially paying $18.6 million in volume to the wrong winners before reversing payouts minutes later.
  • Michigan scored a game-winning touchdown with one second remaining after officials reviewed a ball-out-of-bounds ruling, reversing an initial clock stoppage that Kalshi had treated as final.
  • The malfunction occurred five days after Michigan courts barred Kalshi from offering sports contracts to residents, imposing a $500,000 daily penalty for non-compliance.
  • $18.6M Trading volume processed before Kalshi discovered and corrected the settlement error
  • $93,301 Potential payout on Kalshi’s own promotional Western Michigan position under incorrect settlement
  • $500,000 Daily penalty Michigan courts imposed on Kalshi for offering sports contracts to state residents
  • 5 days Time elapsed between regulatory order and the football market settlement failure

Kalshi, a prediction market exchange, prematurely settled a college football market on Western Michigan versus Michigan, paying traders who had backed the losing side before reversing those payments minutes later. The sequence unfolded during the game’s final moments when Michigan trailed 12-7 with the clock showing zero following an incomplete pass. Western Michigan players began celebrating on the field, and Kalshi treated the zeroed clock as final, disbursing payouts to Western Michigan backers. However, officials reviewed the play, determined that a Western Michigan defender had touched the ball while out of bounds, and restored one second to the clock. With that second remaining, Michigan quarterback Bryce Underwood threw a 47-yard touchdown pass to JJ Buchanan, giving Michigan a 13-12 victory.

Kalshi’s Incorrect Payout and Rapid Reversal

Upon discovering the error, Kalshi clawed back payments from traders initially marked as winners, reimbursed those initially marked as losers, and then distributed correct payouts to Michigan holders. The market had processed $18.6 million in trading volume by the time the final result became official. Kalshi’s own promotional account had highlighted a $2,265 Western Michigan position during the game, which would have yielded a $93,301 payout under the incorrect settlement.

The exchange corrected the payouts within hours, demonstrating technical capability to reverse transactions once the error was identified. This rapid response prevented sustained financial loss to most traders, though the incident highlighted gaps in automated settlement protocols that are supposed to prevent such errors from occurring in the first place.

Prediction markets have grown rapidly in recent years, attracting institutional and retail traders seeking exposure to outcomes of political elections, geopolitical events, and other occurrences. Unlike traditional sports betting, which operates under state gaming regulations, prediction markets occupy a more ambiguous regulatory status. They function as derivative exchanges where participants trade contracts whose value depends on uncertain future events. This structural distinction allows platforms like Kalshi to argue they operate outside traditional gambling frameworks, positioning themselves instead as financial instruments.

Disputed Officiating Complicates Settlement Questions

The settlement error has drawn scrutiny beyond the immediate correction due to ambiguity surrounding the officiating decision itself. NBC rules analyst Terry McAulay questioned how officials determined that one second remained on the clock, stating “The ball isn’t even close to touching a player when it goes to zero,” according to CBS reporting. The disputed nature of the officials’ judgment creates additional complexity for prediction markets that operate on the assumption of clear, objective outcomes.

When the underlying factual determination itself becomes disputed, settling such markets becomes inherently problematic. Prediction platforms face the challenge of verifying official outcomes in cases where the officiating decision may be controversial or subject to reasonable disagreement among experts. Sports markets introduce particular complexity because official determinations can be revisited through replay review, as happened in this case.

The football market failure raises operational questions about how Kalshi monitors game clocks in real time and determines when events have conclusively concluded. Most sports markets rely on official league determinations or certified scorekeeping sources, yet those sources themselves can issue corrections after preliminary announcements. For markets settling on clock-based outcomes or other rapidly evolving facts, the interval between preliminary and final official determination creates a window where platform systems must remain responsive.

Regulatory Timing Intensifies Industry Scrutiny

The malfunction occurred five days after a Michigan court barred Kalshi from offering sports contracts to state residents, imposing a $500,000 daily penalty for non-compliance effective September 1. The football market failure happened during this period of active legal constraint against the platform. This regulatory action reflects broader uncertainty about prediction markets’ legal status under existing sports gambling and derivatives regulations.

The incident adds concrete evidence to growing concerns about prediction markets’ collision with sports law and regulatory oversight. State attorneys general and gaming regulators have increasingly questioned whether prediction markets constitute illegal sports gambling when they settle on sports outcomes. Kalshi’s disclosure of what caused the settlement failure and how it prevented similar errors may carry more weight with regulators than the refund itself, as observers assess whether platforms possess sufficient operational maturity to handle these products responsibly.

Federal derivatives regulators have also begun examining prediction markets more closely, questioning whether platforms offering sports-related contracts should face stricter operational and financial resilience requirements. The malfunction provides regulators with real evidence of system failures that could affect market integrity and trader losses.

The platform must demonstrate robust systems for preventing premature settlement and handling edge cases where initial determinations prove incorrect. Kalshi has not yet publicly disclosed specific technical or procedural changes undertaken to prevent recurrence, or whether the football market settlement protocols have been modified in light of the error. The incident demonstrates that even platforms with capital and technical sophistication face fundamental challenges in automating settlements tied to events where human judgment remains central to the outcome determination.

Will LeBron James’ Polymarket Deal Help Prediction Markets Go Mainstream?

Will LeBron James’ Polymarket Deal Help Prediction Markets Go Mainstream?

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LeBron James’s move to Polymarket signals growing mainstream acceptance of prediction markets as the sector competes for legitimacy against traditional sportsbooks and regulatory pressure. The partnership arrives as prediction market volume has surged to $20 billion monthly, yet legal challenges from multiple states threaten to impose gambling restrictions on the platforms.

  • LeBron James announced a partnership with Polymarket on September 5, 2026, after his DraftKings endorsement deal expired earlier in summer.
  • Prediction market volume reached $20 billion per month by January 2026, up from approximately $1.2 billion in early 2025.
  • Multiple state governments have filed lawsuits against prediction market operators, alleging they function as unlicensed sportsbooks subject to gambling regulation.
  • $20B Monthly prediction market volume by January 2026, up from $1.2B in early 2025
  • $15B Polymarket’s valuation sought in April 2026 funding round, up 67 percent from October 2025
  • $245M Volume generated by bets on LeBron James’s next team earlier in summer 2026
  • $2B Intercontinental Exchange commitment to Polymarket, signaling institutional financial backing

NBA star LeBron James partnered with Polymarket, the prediction market platform, through an announcement video posted to X on September 5, 2026. The video showed James at Polymarket headquarters, with an elevator displaying market categories including politics, crypto, economy, culture, weather, esports, and technology, before he stepped out on a sports floor to tease a full announcement. The deal marks a strategic shift for James, whose endorsement contract with sportsbook DraftKings expired earlier in the summer after a partnership that began in 2024.

LeBron James Leaves DraftKings For Prediction Market Platform

James’s departure from DraftKings to Polymarket reflects the intensifying competition between prediction markets and traditional sportsbooks for athlete endorsements and mainstream attention. Prediction market platforms operate across multiple asset classes beyond sports, including politics, economics, and culture, positioning them as broader financial trading venues rather than direct competitors to legacy sportsbooks like DraftKings, FanDuel, and BetMGM, which have dominated legal sports betting since the Supreme Court struck down the federal sports betting ban in 2018.

The shift also demonstrates how celebrity partnerships function as credibility signals in an emerging sector seeking mainstream legitimacy. Unlike traditional sportsbooks that derive revenue primarily from betting margins, prediction markets position themselves as information aggregation platforms where users trade contracts tied to real-world outcomes across diverse categories. This distinction has proven important in regulatory discussions and investor presentations, even as states increasingly challenge whether the distinction holds legal weight.

For athletes like James, prediction market partnerships offer opportunities to align with innovative financial platforms without the reputational constraints sometimes associated with traditional gambling endorsements.

Sector Volume Explodes As Competition Intensifies Among Operators

Prediction market volume has grown dramatically in recent months, reaching $20 billion per month by January 2026 compared to approximately $1.2 billion in early 2025. This 1,567 percent surge reflects institutional and retail investor appetite for alternative betting platforms and their expanding market categories. Bets on James’s own next team generated more than $245 million in volume earlier in the summer, demonstrating the platforms’ ability to capture substantial financial flows and public interest simultaneously.

Polymarket and rival operator Kalshi are competing aggressively for celebrity partnerships and institutional validation. Giannis Antetokounmpo became a shareholder in Kalshi earlier in 2026, while Polymarket secured an official partnership with Major League Baseball. The NHL struck deals with both Polymarket and Kalshi in October 2025, signaling that traditional sports institutions are recognizing prediction markets as established players in the betting ecosystem and viewing the platforms as revenue opportunities and fan engagement tools.

NBA Allows Player Endorsements While NFL And PGA Tour Maintain Stricter Bans

NBA league rules permit players to endorse prediction markets, though they prohibit endorsement contracts tied directly to NBA games themselves. This framework protects competitive integrity while enabling athletes to participate in the broader creator economy and emerging financial technologies. In contrast, the NFL and PGA Tour reportedly ban endorsement deals with prediction market platforms entirely, reflecting more conservative regulatory postures and concerns about the industry’s legal status.

The NBA’s permissive stance provides a competitive advantage for platforms seeking athlete partnerships and reflects the league’s relative openness to sports betting innovation. Prediction market operators have targeted NBA players specifically, recognizing that basketball’s global audience and player influence can drive platform adoption among younger demographics who may lack experience with traditional financial markets.

As regulatory clarity improves and prediction markets demonstrate viability, these policy differences across leagues may shift over time.

Institutional Investment And Valuation Surge Despite Legal Headwinds

Polymarket’s valuation has climbed sharply despite regulatory uncertainty. The platform sought $400 million at a $15 billion valuation in April 2026, a 67 percent increase from its $9 billion valuation in October 2025. This growth trajectory reflects strong institutional confidence in the sector’s long-term expansion and viability as financial infrastructure, even as legal challenges mount.

Intercontinental Exchange, the owner of the New York Stock Exchange, committed $2 billion to Polymarket, providing backing from an established financial institution that enhances platform credibility and financial stability. Such investments signal that prediction markets are transitioning from speculative startups toward established infrastructure providers integrated within institutional finance. ICE’s involvement particularly matters because it lends legitimacy from a recognized derivatives exchange operator with deep regulatory experience.

Multiple States Sue Prediction Market Operators Over Licensing And Gambling Regulation

Prediction market operators face mounting legal challenges that could reshape the regulatory landscape. Baltimore filed suits against both Polymarket and Kalshi in August 2026, alleging they operate as unlicensed sportsbooks subject to state gambling regulations. New York sued Kalshi in July for more than $36 billion, representing an escalated regulatory approach designed to force compliance with existing gambling frameworks.

These lawsuits expose a fundamental tension between prediction markets’ claims to operate as financial exchanges and state gambling regulators’ assertion that they function as unregulated betting platforms. Resolution of these disputes will likely determine whether prediction markets can maintain their current operating model or must restructure under gambling licensing requirements. The scale of New York’s lawsuit signals that state authorities view the sector as a significant threat to established gambling tax revenues and regulatory authority.

Legal experts remain divided on whether prediction markets qualify as investment platforms or gambling services. If courts determine they function as gambling, operators would need to obtain sportsbook licenses in each state where they operate, dramatically increasing compliance costs and limiting market access to states with legal sports betting frameworks.

Polymarket Expands Into Pokemon Cards And Niche Trading Categories

Polymarket has diversified beyond traditional politics and sports betting by adding Pokemon card markets in August 2026. This category expansion aims to capture speculative trading volume from younger demographics and niche collector communities, broadening the platform’s appeal beyond the core sports betting audience. The move reflects the platform’s strategy to position itself as a financial exchange rather than a sportsbook, trading on alternative assets like collectibles that carry different regulatory implications than sports betting.

The James partnership timing coincides with the start of the football season, providing an immediate test of whether celebrity endorsements can drive mainstream adoption among casual fans and convert them into active traders on prediction platforms, as the sector navigates ongoing state-level litigation that could restrict operations or impose gambling regulations that fundamentally reshape the industry’s business model and growth prospects.

Ex-Congressman George Santos Receives Lifetime Ban From Kalshi Following Self-Wagers

Ex-Congressman George Santos Receives Lifetime Ban From Kalshi Following Self-Wagers

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Kalshi’s lifetime ban of George Santos marks the first permanent penalty of its kind on the prediction-market platform and highlights mounting regulatory pressure on the sector. The action underscores how prediction markets must police self-dealing by users with direct influence over event outcomes.

  • Santos earned $17,839.57 from trading in State of the Union attendance markets despite being prohibited from such trades.
  • Kalshi imposed a $71,356 penalty alongside the permanent ban, effective August 28, 2026, following its compliance investigation.
  • Santos had already settled with the CFTC for $35,000 in a related matter without admitting or denying findings.
  • $17,839.57 Amount Santos earned from targeted prediction markets on his own attendance
  • $71,356 Penalty imposed by Kalshi’s Compliance Department against Santos
  • $35,000 Settlement amount Santos paid to the CFTC in related case
  • Aug 28, 2026 Effective date of Kalshi’s lifetime ban on Santos

Prediction-market exchange Kalshi has permanently barred former US Representative George Santos from the platform after determining he engaged in insider trading and market manipulation tied to his own congressional attendance. The ban, taking effect August 28, 2026, represents the first lifetime suspension Kalshi has imposed on any user. Alongside the permanent suspension, which blocks both direct and indirect access, Kalshi’s Compliance Department levied a $71,356 penalty against Santos.

Prediction markets have emerged as a significant innovation in financial markets, allowing users to trade contracts whose value depends on the outcome of future events. These platforms have attracted both retail and institutional participants betting on political elections, economic indicators, and weather events. However, the nascent industry operates in a largely unresolved regulatory environment, creating challenges for platforms seeking to maintain market integrity while determining which trading activities constitute legitimate speculation versus prohibited self-dealing.

Santos Traded On His Own Attendance Despite Trading Restrictions

According to Kalshi’s compliance findings, Santos placed a series of large trades between February 2 and February 25 in contracts whose payoff depended on whether he would attend the State of the Union address on February 24. He was explicitly prohibited from trading in these markets because his personal decision could directly influence the event’s outcome. From these targeted positions, Santos materially benefited and earned $17,839.57.

The structure of the trades made the conflict of interest unmistakable: Santos held the unilateral power to determine the outcome of the contracts he had purchased. As a sitting member of Congress at the time, his attendance or absence was entirely within his control, creating a scenario where he could profit directly from his own decisions.

This type of conduct represents a fundamental threat to prediction market integrity. Unlike traditional securities markets where corporate officers face strict restrictions on trading based on material nonpublic information, prediction markets present unique challenges because event outcomes can sometimes be directly controlled by individual market participants. Kalshi’s trading restrictions were designed to prevent exactly this scenario, yet Santos proceeded despite the explicit prohibition.

CFTC Settlement Preceded Kalshi’s Enforcement Action

Santos reached a settlement with the Commodity Futures Trading Commission last month, agreeing to pay $35,000 while neither admitting nor denying the agency’s findings. His counsel, Joseph W. Murray, stated that Santos cooperated with the CFTC throughout its investigation. The CFTC asserted regulatory jurisdiction over prediction markets in connection with the matter, similar to a previous case involving a former White House official who traded on confidential information.

The dual enforcement actions by both the CFTC and Kalshi reflect overlapping authority over prediction-market conduct and insider trading concerns in the sector. The CFTC’s involvement signals that federal regulators view prediction markets as subject to commodity trading rules, establishing precedent for continued regulatory oversight. This jurisdictional clarity remains crucial as the industry expands and regulatory frameworks continue to develop.

Santos Contests Kalshi’s Procedure and Timeline

In response to Kalshi’s action, Santos posted on X that the exchange had violated its own procedural deadlines and notices. He claimed an August 7 notice should have afforded his side 30 days before any enforcement action, and he questioned why Kalshi had announced its decision before that period expired.

Leaking and attention seeking seem to be the M/O of this organization. Pathetic!

George Santos, former US Representative

Santos did not dispute the factual basis of Kalshi’s compliance findings but focused his objection on what he characterized as procedural violations by the platform. The dispute raises questions about enforcement procedures at prediction-market platforms, which lack the decades of regulatory precedent governing traditional financial exchanges.

Prediction Markets Face Mounting Regulatory and Legal Challenges

Kalshi’s enforcement action arrives amid broader scrutiny of prediction-market platforms from regulators and lawmakers. Last month, Baltimore officials sued both Kalshi and Polymarket, alleging that their sports prediction contracts constitute unlicensed sports betting and potentially mislead consumers about legal and regulatory status. Kalshi is also defending a separate lawsuit filed by New York Attorney General Letitia James.

The Santos enforcement also follows Kalshi’s previous suspension of three US political candidates after finding they bet on election outcomes they directly influenced, calling such activity “political insider trading.” That pattern of conduct demonstrated the platform’s commitment to preventing self-dealing before the Santos case materialized.

The Santos ban establishes a precedent for how Kalshi will handle users capable of influencing event outcomes, though the platform faces mounting legal exposure across multiple jurisdictions and may face further regulatory action as state attorneys general and federal agencies clarify their oversight authority over prediction markets. As the industry matures, platforms will likely need to develop more sophisticated compliance systems to identify and prevent insider trading while maintaining the market liquidity that makes prediction markets functional.

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