Published November 26, 2012
Hours after being sued by U.S. regulators for violating commodities laws, online prediction market Intrade told U.S. residents on Monday to immediately begin shutting down their accounts due to "legal and regulatory pressures."
The Dublin-based company had recently grown popular with investors as a way to gauge opinions on everything from election outcomes to acts of war.
"We are sorry to announce that due to legal and regulatory pressures, Intrade can no longer allow U.S. residents to participate in our real-money prediction markets," the company said in a statement Monday evening.
Intrade said it is "strongly" urging U.S. residents to "immediately" start to close down their accounts. The company said U.S. investors must close out all open predictions before 3 a.m. ET on December 23.
If U.S. residents don't close out their positions before the deadline, Intrade said it will do so at what the company deems fair value as of the daily session close that day.
Intrade also said it is waiving its $4.99 monthly fee due on December 1 as well as the $20 fee normally charged for processing a bank wire withdrawal.
"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. We would like to sincerely thank all U.S. customers for their custom, support and loyalty over the years," Intrade said.
Earlier in the day the Commodities Futures Trading Commission filed a civil lawsuit against Intrade The Prediction Market and the Trade Exchange Network with offering commodity option contracts to U.S. customers for trading and soliciting and accepting orders from U.S. customers, violating the agency's ban on off-exchange options trading.
The CFTC also charged Intrade and TEN with making false statements concerning its options trading website in documents filed with the agency. Both Intrade and TEN jointly operate the online prediction market website.
"It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called 'prediction' contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt," David Meister, director of the CFTC's division of enforcement, said in a statement.
The CFTC said it is seeking undisclosed civil monetary penalties, the disgorgement of "ill-gotten gains" and permanent injunctions against future violations.