CFTC Charges Online Betting Market Intrade With Violations of Commodities Exchange Act, seeks Refunds for Customers

by InvestorLawyers on December 3, 2012

in Uncategorized

The U.S. Commodity Futures Trading Commission (CFTC) has filed a lawsuit in the U.S. District Court for the District of Columbia alleging that online betting market Intrade and associated companies violated the Commodities Exchange Act by facilitating illegal off-exchange trading in options contracts. The complaint is accessible below.

Intrade operates an online “prediction market” trading website through which customers buy or sell what are technically options contracts enabling customers to wager whether certain events will occur. The subject matters of the wagers range from political elections to whether NASA will announce the discovery of extraterrestrial life. Certain of the Intrade contacts, including

Bettors who predict that an event will occur buy shares in Intrade, and those who predict the event will not occur sell shares. If the event occurs, bettors who bought shares receive $10. If the event does not occur, bettors who sold shares must pay $10. The “price” of each share represents the percentage likelihood of an event occurring based on the collective wisdom of all bettors in a particular options contract or wager.

The CFTC alleges that some of these options contracts or wagers are illegal as to U.S. customers because they represent off-exchange options trading that violates CFTC regulations. The CFTC also seeks to recover disgorgement of sums by which Intrade was enriched as a result of facilitating allegedly illegal off-exchange options transactions. Intrade affiliate Trade Exchange Network also allegedly was the subject of a 2005 CFTC order specifically listing as examples of banned options such contracts as the daily crude oil contract, gold futures, light sweet crude oil futures and the intraday euro versus U.S. dollar rate contract,

Violations of the Commodities Exchange Act can provide the basis for recovery of damages for private plaintiffs who file their own lawsuits, either individually or as a class action. Intrade customers who wish to explore possible legal claims arising out of Intrade’s alleged violations of the Commodities Exchange Act may contact Law Office of Christopher J. Gray, P.C. for a confidential, no-obligation consultation. 12.11.26 INTRADE COMPLAINT

Previous post:

Next post: