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Kalshi CEO expects US DOJ to prosecute insider trading cases

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Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#141

Post by chiefalchemist »

slg wrote: post #63
chiefalchemist wrote: post #50

Earlier quoted context omitted.

What proof do you have that there is a difference between the Team Red and Team Blue, other than your not on the team you’re railing against. For example, given Nancy Pelosi’s effectiveness as an investor, she was effectively a highly successful day trader with a side hustle as a representative of her constituents. Framing this as a Left v Right, is at best, naive.

>What proof do you have that there is a difference between the Team Red and Team Blue...Framing this as a Left v Right, is at best, naive. You're responding to a comment that explicitly said I wasn't doing that. This is not Left vs Right, it's Trump vs everyone else.

Your bias is blinding you. The System is corrupted. Full stop.

How do we know? Look who is in the WH. How can a fair and just system lead to that? You’re failing for the “OMG! Look at him!!” narrative. A narrative brought to you by the people whose incompetence and negligence led to Trump. A narrative that distracts from their failures. You should be asking: How did we get here? Who is accountable? But you’re not.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#142

Post by chiefalchemist »

akio wrote: post #66
chiefalchemist wrote: post #50

Earlier quoted context omitted.

What proof do you have that there is a difference between the Team Red and Team Blue, other than your not on the team you’re railing against. For example, given Nancy Pelosi’s effectiveness as an investor, she was effectively a highly successful day trader with a side hustle as a representative of her constituents. Framing this as a Left v Right, is at best, naive.

Trump's second-term clemencies so far have forgiven criminal debts of more than $1.5 billion. That's over 2,000x the amount amount eliminated by Biden's pardons ($680,000). These pardons go to convicted criminals who have ties to Trump and his administration, or who have donated significant sums to Trump. It is very obvious the current administrating is the most corrupt administration in modern history by several ord…

And what of Pelosi and the like? The problem is, you’re not able to measure what you cannot see.

For example, the obvious… Epstein Files. That went on for how long? Involved hundreds if not thousands of (mostly) men of power. Bill Clinton comes to mind.

Just because you couldn’t see the corruption doesn’t mean it wasn’t there.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#143

Post by kasey_junk »

ikeboy wrote: post #121
JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> If you're trading, like, oil futures or wheat futures or whatever, you are likely doing so specifically because you have inside information about your business needs Insider trading, in the U.S., is not legally about fairness but about theft. A firm hedging its own positions is using its information for its own purposes. A federal employee trading on what they heard is abusing the trust placed in them by the Americ…

Note that the 2nd circuit tossed an insider trading case on government information on the basis that it doesn't count as "property". See United States v. Blaszczak. It may be abuse of trust but that's not automatically a crime.

Or it maybe a crime but not insider trading.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#144

Post by bradleybuda »

mlmonkey wrote: post #115
bradleybuda wrote: post #12

Earlier quoted context omitted.

There was a downward trend during the Biden years [1] but "both sides same" is not even a little bit true. [1] https://www.citizen.org/article/biden-doj-2024-corporate-cri...

How many people were jailed by Obama's DOJ for 2008 crash?

That wasn’t insider trading. You’re changing the topic.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#145

Post by JumpCrisscross »

chromacity wrote: post #122
JumpCrisscross wrote: post #103

Earlier quoted context omitted.

> Prediction markets don't have any "natural" reason like that for excluding insider trading Corporate employees abusing trust are doing it equivalently whether they trade securities or place bets. Government employees, similarly, don’t personally own the country’s data. In a minority of cases, the information is one’s own, e.g. bets on how many times a person says a word. But most of the time, there is a breach of t…

> Corporate employees abusing trust are doing it equivalently whether they trade securities or place bets. But the crime the article is talking about isn't "abusing trust", it's insider trading. Insider trading is defined in a specific way. For one, as far as I understand it, it must involve securities.

> Insider trading is defined in a specific way. For one, as far as I understand it, it must involve securities

I just remembered that Dodd-Frank expanded insider trading to cover e.g. commodities [1]. So it definitely applies outside securities in the U.S.

[1] https://www.lw.com/admin/upload/SiteAttachments/Alert%202827...

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#146

Post by AnthonyMouse »

tptacek wrote: post #126
AnthonyMouse wrote: post #118

Earlier quoted context omitted.

You're predicting something which is happening in six months but is affected by data which is being published today. Do you want a more accurate price that comes in the afternoon, or a less accurate price that comes in the morning and then stays less accurate for months because the insiders ate too much of the expected profit margin to justify more expensive analysis?

I don't understand how your analysis works. How are you proposing people who are right early get run over by people who are right with certainty later?

Suppose there is a yes/no question on a prediction market which currently has "yes" at 0.20 and "no" at 0.80. Some data is about to be published that unambiguously makes "yes" more likely, but it's less obvious how much more likely and a more accurate prediction requires more resources or skill.

Further suppose you were going to spend resources analyzing the data and after that your conclusion would be that "yes" is a buy at up to 0.75, i.e. you think there is a 75% chance of it happening. And it turns out you were on the right side because it does end up being yes.

If everyone gets the data at the same time, you can start buying "yes" when it's still at 0.20 and keep buying it until it gets up to 0.75. If someone gets the data before you, even if they're (wrongly) less confident than you and only buy at up to 0.55, they start buying a day earlier and by the time the data is published, "yes" is already at 0.55. The result is that you, who were a buyer at up to 0.75, get significantly fewer contracts (because the other sellers already sold to the insider), and worse yet you only get the ones that cost more than 0.55 instead of getting many of the ones that were 0.20. In other words, you make significantly less money when it ultimately turns out you were right.

If your average profit is now less than the amount you needed to justify doing the analysis, you stop doing it, and then you don't buy any contracts at all. Then the price ends up stuck at 0.65 "yes" instead of 0.75 "yes" when "yes" was the right answer, because there wasn't enough profit left to fund an analysis that could justify higher confidence in the correct result.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#147

Post by AnthonyMouse »

tptacek wrote: post #125
AnthonyMouse wrote: post #120

Earlier quoted context omitted.

The problem is it's pretty hard to tell ahead of time whether that's what happens. Suppose some large private company has to decide whether they're going to build a new facility in city A or city B. This is useful information for all kinds of reasons. If you're a vendor then you need to start making preparations to set up shop in the city where your big customer is moving etc. The company's analysis shows it would de…

A private company of any real size isn't plausibly going to choose Atlanta over Chattanooga to win a prediction market bet. This is a good example of the kind of prediction that can theoretically be prosocial, and one strong indicator that it might be is that an insider bet is helpful rather than harmful. On the other hand, at the point where the prediction market winnings are material enough that they might alter th…

> On the other hand, at the point where the prediction market winnings are material enough that they might alter the underlying decision itself, you've clearly got an antisocial structure.

How is that supposed to be determined?

There are many decisions that have only minor implications to the party making them (they're choosing between two nearly-equivalent alternatives) but massive implications for third parties (the company or city chosen gets a huge gain and knowing which one is valuable information). When the decision itself is essentially a coin flip, any prediction market winnings could alter the underlying decision. And whether it's that close of a decision is the thing the market would be trying to predict rather than something you already know.

Re: Kalshi CEO expects US DOJ to prosecute insider trading cases

#150

Post by Eddy_Viscosity2 »

AnthonyMouse wrote: post #120
tptacek wrote: post #97

Earlier quoted context omitted.

If the outcome of a prop bet really is fully controlled by insiders, so that those insiders are making decisions based on betting outcomes, then allowing that betting to occur seems antisocial and counterproductive to begin with. This is another problem with the Polymarket/Kalshi species of "prediction market".

The problem is it's pretty hard to tell ahead of time whether that's what happens. Suppose some large private company has to decide whether they're going to build a new facility in city A or city B. This is useful information for all kinds of reasons. If you're a vendor then you need to start making preparations to set up shop in the city where your big customer is moving etc. The company's analysis shows it would de…

A different example would be people bettering on whether a politician/celebrity will wear a certain color at an event. Since these apps allow exactly these sorts of trivial bets, this is not an stretch. That politician/celebrity or their team could easily wear a color that aligns with their bets. This seems indistinguishable from a scam.
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