00:00So is this, could it be insider trading? Is that possible in a prediction market?
00:05So it is, and the CFTC has rules against that.
00:09It's a type of insider trading known as misappropriation.
00:13And the law is actually interesting because it's somewhat of a legend within the CFTC.
00:19It's called the Eddie Murphy rule.
00:21And it's after the movie Trading Places, where there's insider trading on orange juice futures.
00:28There we go. By the way, that's one of my favorite holiday movies.
00:31It's a classic.
00:32Me too. And so, right, but so in 2010, that law was passed.
00:37And it prohibits specifically trading on inside information that comes from the government.
00:43So assuming someone knew it came from the government and had the requisite intent,
00:47that's not only a violation of the CFTC rules, but it could also be a crime.
00:51So do you see something happening here with this particular trade, this particular contract?
00:56I mean, is this CFTC, and I know you're no longer there, but is this the kind of thing that the one person who is working at the CFTC,
01:03the one commissioner who's there, is going to go after?
01:06Well, like you said, I'm not there, so it's hard to tell.
01:09But this has gotten a lot of attention, of course.
01:11It hasn't been the only incident that's gotten attention, right?
01:13There was the Nobel Peace Prize event contract recently where those odds shifted dramatically.
01:21And so when you are a regulator or a prosecutor, you pay attention to these reports.
01:27And I think what's interesting is a few things, right?
01:29Like this is very transparent of a market.
01:33I mean, the public was involved in this right away.
01:35The trades and some of the money transfers were on the blockchain, right?
01:40So you see now how ordinary citizens online are able to trace the money and call it to the attention of the public.
01:48When I was a regulator or a prosecutor, we did pay attention to these news reports.
01:52And often it would start a lead.
01:54So that would be something that you would start an investigation off,
01:57but you would not necessarily and you wouldn't make a case off of that.
02:03What you would do is then go and look for other evidence, right?
02:06So you talk to witnesses.
02:08If you're working with DOJ, you would get a search warrant for someone's email account,
02:13for their text messages to see what's going on inside their head.
02:17What did they mean?
02:17Because a common defense in insider trading, right, in whether it's equities, crypto prediction markets is,
02:24no, I did a lot of research here.
02:27I've been an expert, right?
02:28So you could see someone saying that.
02:29I'm an expert in U.S.-Venezuelan relations.
02:33I've been following this closely.
02:34I noticed that the Pentagon was ordering pizzas.
02:37Remember that report that came out, which seems indicative that something might happen.
02:42And so those are the things regulators will look at.
02:44I read the tea leaves and I made a bet based on that or I made a decision based on that.
02:48I'd mentioned that the CFTC is a slimmed down version of what it used to be.
02:51It's supposed to be a five-person commission, but right now there is just one person.
02:55Is that a functioning agency with one commissioner?
02:57Well, we will see.
02:59But, you know, that is permitted by law, it seems.
03:03When the current chairman testified at his confirmation hearing, he said it would be a good thing to have other voices.
03:10And the push-pull, which helps to make good policy.
03:13And I think that's right.
03:15But also keep in mind there's a large staff at the CFTC in the hundreds, very skilled group of folks who know these markets very well.
03:24And they are very capable.
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