CFTC Warns of Potential Manipulation in Prediction Markets in Filing Against Kalshi

cryptonews.com:

Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

The U.S. Commodity Futures Trading Commission (CFTC) has raised concerns about the susceptibility of prediction markets to manipulation in its latest filing against Kalshi, a U.S.-based prediction market platform.

The CFTC mentioned examples of recent manipulative actions on competitor platforms, suggesting that Kalshi’s markets could face similar issues.

In a filing dated September 14, the CFTC cited previous incidents where prediction markets had been exploited.

One example involved traders on Polymarket attempting to manipulate contracts related to Vice President Kamala Harris’ potential victory in the 2024 U.S. presidential election.

Additionally, a fabricated poll on PredictIt, showing musician Kid Rock leading Senator Debbie Stabenow in a senate race, significantly impacted the pricing of contracts for Stabenow’s reelection.

Kalshi, which allows users to bet on election outcomes, had previously faced legal challenges from the CFTC.

On September 6, District Court Judge Jia Cobb ruled in favor of Kalshi in part, allowing the platform to offer election-related betting, according to Kalshi’s founder, Tarek Mansour, in a social media post.