For most of last year, it seemed prediction markets a new golden age of fraud had begun. In Polymarketmerchants accumulated fortunes thanks to suspiciously timed bets about geopolitical events such as the attack on Venezuela and the war in Iran. It was unclear whether the US government would bother going after some of the more egregious bad actors, as Polymarket’s crypto platform was technically offshore and not regulated or licensed within the country.
Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants you to know that it is watching very, very closely. The agency is looking for suspicious behavior by traders within the United States who have been infiltrating offshore markets, including the Polymarket crypto platform, which is blocked in the United States, through the use of virtual private networks. “We’re going to find them and we’re going to take action,” agency Chairman Michael Selig told WIRED this week, speaking from CFTC headquarters in Washington, DC.
Selig says the agency, which is especially thin right now, is hiring. Like so many other AI-based workplaces, the CFTC is also leaning toward automation to handle the growing workload, including tools that analyze trading patterns and flag potential manipulations. “You have a ton of data,” Selig says. “When we put that into AI, we get really great information. It can help us understand things, like where we might want to investigate or when we might need to send a subpoena to a merchant.”
In addition to proprietary surveillance systems developed in-house, the agency’s arsenal includes third-party systems. blockchain tracking tools such as Chainalysis for crypto platforms and market abuse detection software, including Nasdaq Smarts for centralized exchanges. (Beyond Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples.)
