For much of the last year, it seemed as if prediction markets had ushered in a new golden age of fraud. On Polymarket, traders made a lot of money by betting at dubious times on geopolitical events such as the Venezuela raid and the Iran war. It was unclear whether the US government would bother to pursue some of the most prominent bad actors, as Polymarket’s crypto-based platform was technically offshore and not regulated or licensed within the country.
Now, however, the Commodity Futures Trading Commission, which oversees prediction markets, wants to let you know that it is watching very closely. The agency is exploring the suspicious behavior of traders from the United States who are using virtual private networks to infiltrate offshore markets, including Polymarket’s crypto platform – which is blocked by states. “We’re going to find them, and we’re going to take action,” agency Chairman Michael Selig told WIRED, speaking this week from CFTC headquarters in Washington, DC.
Selig says the agency, which is particularly stretched right now, is expanding its workforce. Like many other AI-piled workplaces, the CFTC is also leaning toward automation to handle the growing workload, including tools that analyze trading patterns and flag potential manipulation. “You have a lot of data,” says Selig. “When we feed it 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 monitoring systems developed in-house, the agency’s arsenal includes third-party blockchain tracing tools like Chainalysis for crypto platforms and market abuse detection software, including Nasdaq Smart for centralized markets. (Beyond Nasdaq Smarts, the agency did not specify which AI tools it uses and declined to share more specific examples.)
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