In surprise move, Intrade shuts down for US traders
Intrade, the futures trading website, will no longer be available to residents of the United States as a result of “legal and regulatory pressures,” the Dublin, Ireland-based site announced Monday.
The website allows people to buy and sell shares in possible outcomes. For example, before Election Day, users could buy shares that President Barack Obama would be re-elected. Those who did were paid out for those shares when Obama defeated Mitt Romney. Users who held shares in Romney becoming president lost money on those shares.
“We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow US residents to participate in our real-money prediction markets,” Intrade said in a Monday release.
U.S. users must quickly close their accounts and settle their bets, the site said.
“We strongly urge you to begin this process immediately,” the release added. Users have until Dec. 23 to “close out open predictions.”
If users do not do so before the deadline, “Intrade will close out your predictions for you at what we consider to be fair market value as of the daily session close of December 23, 2012.”
“Fair market value will be determined using current and historical price information, including daily close prices and recent trades. Values will be set at the absolute discretion of Intrade and will not be open for review, discussion or argument – our determination of fair market value is final,” the release said.
Users then have until Dec. 31 to withdraw all of their funds from their Intrade account. Intrade is waiving the fee normally charged for a withdrawal, as well as the monthly fee for December. (RELATED: Could Intrade be manipulated to swing elections?)
“We understand this announcement may come as a surprise and a disappointment, and we apologize for the short notice and haste required to deal with this,” the release concludes. “We would like to sincerely thank all US customers for their custom, support and loyalty over the years.”
The decision comes the same day that the Commodity Futures Trading Commission sued Intrade’s owner, alleging that the website “allowed unauthorized trading by U.S. customers,” Reuters reported.
The suit claims that Intrade allows U.S.-based traders to buy shares in subjects that are banned by the CFTC, and that Intrade was notified of the alleged violations in March, but “has failed to cure, or attempt to cure, its violations.”
The reaction on Intrade’s forum was one of surprise and irritation. Posters expressed shock at the suddenness of the site’s decision, while others lamented the difficulties of closing their accounts.
“[I] don’t even know how to begin trying to unload some large positions, might be better off taking whatever gains and losses intrade gives on the 23rd,” posted WashingtonTrader.
“Yeah it will be impossible for me to unwind my Oscar bets right now. Impossible,” responded another user called Domer. “And how will they expire the contracts if one party is a US member and the other is not?”
Nate Silver, who runs the FiveThirtyEight blog at the New York Times and often cites Intrade in his predictions and analyses, tweeted earlier on Monday, before Intrade announced it would close down: “Out of all things the CFTC could be doing to protect consumers and investors, it chooses to sue Intrade?!?”
Silver has not tweeted since the site announced its decision, but one Intrade user suggested he should come to the website’s rescue.
“Ask Nate Silver for lobbying help,” suggested a poster called Ingen Angiven in Intrade’s forum.
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