7 ms·

Intrade discovers a $700k cash shortfall

101 points by dopamean 14y ago

logn 14y ago
Did you post the URL in the wrong field?
- lowboy 14y ago
  Nope, looks great.
- dopamean 14y ago
  When I put the URL in the URL field it forwarded me to a post a few months ago about Intrade ceasing trading. The latest announcement and that announcement a few months ago were both put on the Intrade homepage so I guess the forum thought I was reposting something.
  - derefr 14y ago
    Yes; what people usually do in response to this is to add a query string--e.g., http://www.intrade.com/v4/home/?ohno http://www.intrade.com/v4/home/?ohno
    - dopamean 14y ago
      I'll remember that for the future. Thanks.
alex_doom 14y ago
Golly gee, I wonder where it went!
rorrr 14y ago
There's no way that announcement will cause panic and everyone attempting to withdraw their funds. They are royally fucked. EDIT: And how exactly do you misplace $700K at such early stages?
late2part 14y ago
Is the forbearance agreement the business equivalent of the "Don't Tase Me Bro!!"?
Ovid 14y ago
Reminds me of the time I worked for one company and prior to going public, we called in some Sarbanes-Oxley consultants to vet us. After a thorough SOX compliance effort (which was ridiculous - one recommendation was "print out all source code and file it"), I showed up one day and an accountant in the corner had disappeared. Seems that he had a gambling problem, but was allowed to both cut checks and sign them (fall into the GAAP). He embezzled, IIRC, close to one million dollars and was only found due to the SOX compliance effort.
- nhaehnle 14y ago
  Are you able to discuss in more detail what exactly helped find him?
  - eps 14y ago
    Your good old financial audit. Debits must match credits, and all debits must make sense.
    - e40 14y ago
      It's a little scary that SOX was required to force them to do this... that company was run very poorly, IMO.
      - njharman 14y ago
        They were doing it, they being the embezzling acct.
  - Ovid 14y ago
    I honestly haven't the foggiest idea, sorry. The company only told us the bare minimum because they were trying to contain the damage.
- jacquesm 14y ago
  > After a thorough SOX compliance effort (which was ridiculous - one recommendation was "print out all source code and file it"), If they found that rogue accountant it wasn't all that ridiculous after all. That one requirement was (probably, I don't know the context) ridiculous but the compliance effort apparently wasn't. On another note, I have had a customer a while ago that would have been extremely happy if they had had a printed, filed copy of all their source code.
johnw 14y ago
Sounds like the writings been on the wall for a while now. They were fined by the CFTC in late 2012 and had to withdraw from the US market for not being a licensed exchange [1]. Most of their customers were in the US so this was a major blow to their business. I wonder if there's an opportunity here for a Bitcoin based predictions market? [1] http://motherboard.vice.com/blog/how-the-us-killed-intrade http://motherboard.vice.com/blog/how-the-us-killed-intrade
- stuhood 14y ago
  Haven't used it, but http://betsofbitco.in/ http://betsofbitco.in/ seems to have some traction.
  - foobarqux 14y ago
    That is not a prediction market since there are no prices.
- nandemo 14y ago
  It looks like their demise was due to fraud/embezzlement. Not sure how bitcoin would help here. Also, users of such an exchange would be heavily exposed to the volatility of BTC/$major_currency when making long-term bets. Unless one doesn't care about currency risk, but it's not easy to ignore it unless as long as one's future expenses are still pegged to $major_currency.
  - makomk 14y ago
    Based on past Bitcoin businesses, Bitcoin could help here by making the fraud and embezzlement harder to catch.
  - eric_bullington 14y ago
    The Bitcoin protocol has built into it a sophisticated scripting component which would make it possible to make multiparty contracts (like those on a predictions market) that could not be broken by any means, other than an attack on the underlying Bitcoin protocol. It hasn't yet been fully implemented in any client, but it's there to be used whenever the devs feel comfortable putting it in. This feature has the potential to make Bitcoin fraud/embezzlement much more difficult than it is now.
eps 14y ago
rorrr, you are hellbanned.
- anthonyb 14y ago
  ...and for good reason too. Go back and read his comment history before you warn him.
  - tome 14y ago
    Why do commenters feel the need to point out hellbanning? It seems to defeat the whole purpose.
    - sp332 14y ago
      Sometimes users get hellbanned for no good reason. I was hellbanned for a few days and only noticed because I knew what to look for. I emailed info@ycombinator.com and they said it was an accident, and reinstated me. I agree with anthonyb though, you should probably make sure they're not actually trolls before pointing it out.
      - niggler 14y ago
        The reason for hellbanning is https://news.ycombinator.com/item?id=5413912 https://news.ycombinator.com/item?id=5413912 "Adria Richards is an evil cunt. SendGrid is a shit company that I would never want to work for." Not exactly stellar material.
        anthonyb 14y ago
        No need to inflict it on random passers-by though :P
      - comex 14y ago
        This is why bans should start with a warning - hellbanning may be efficient from an administration perspective, but among other issues, without the possibility of appeal it's fundamentally unfair and prone to mistakes. (The ability of users to appeal after noticing something you're explicitly trying to hide from them isn't really adequate.) But yes, this ban is probably deserved.
benaston 14y ago
Are they not insured?!
- adaml_623 14y ago
  Is it possible to get insurance against embezzlement?
  - ratsbane 14y ago
    It is. It seems weird, but there it is... http://en.wikipedia.org/wiki/Fidelity_bond http://en.wikipedia.org/wiki/Fidelity_bond
  - tlrobinson 14y ago
    It's possible to get insurance against almost everything, the question is how much are you willing to pay?
gdeglin 14y ago
I remember being perplexed looking at the intrade exchange pricing during the last presidential election. I wasn't the only one. Nate Silver and Paul Graham wondered about it too http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-the-virtues-and-vices-of-election-prediction-markets/ http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-t... https://twitter.com/intent/retweet?tweet_id=261513897134141440 https://twitter.com/intent/retweet?tweet_id=2615138971341414... The bets on Obama not being re-elected seemed way too high. I convinced myself at the time that this must have been due to either personal bias or perhaps a strong republican leaning userbase on Intrade. But now it's starting to seem like it may have been part of some scam.
- teleological 14y ago
  I assumed this was because a pool of funds had been set up to prop up Romney's odds to make him appear more viable -- or at least to stave off a story that Intrade users were betting heavily against him. Intrade was a small enough market that this could have been done with a comparatively small investment compared to media buys, and without any technological or financial chicanery. It's not illegal to pay too much for something that could have been had for less.
  - deleted 14y ago
    [deleted]
- sesqu 14y ago
  Query version of the Twitter link: https://twitter.com/paulg/status/261513897134141440 https://twitter.com/paulg/status/261513897134141440
- gwern 14y ago
  It would be elegant and pleasing if we could resolve both mysteries with one stone, but I don't see how it's supposed to work. How does a Romney anomaly lead to $700k embezzled and Intrade suing 2 different parties for $3m+?
NelsonMinar 14y ago
Anyone have a copy of the proposed forbearance agreement for large account holders? It seems pretty brazen to ask people to give the company some slack on repaying deposits when they haven't really come clean on what went wrong. "For legal reasons we are not yet at liberty to document them" isn't good enough explanation; an announcement of specific arrests or civil lawsuits might be.
- derefr 14y ago
  Not tipping someone off that they're about to be arrested constitutes "legal reasons."
  - NelsonMinar 14y ago
    Arrest first, ask for your creditors to give you a break second.
    - UnoriginalGuy 14y ago
      That's a nice idea, but what if they go out of business before the arrests are made?
      - caseysoftware 14y ago
        Typo on my part. My comment was in reference to this: "It seems pretty brazen to ask people to give the company some slack on repaying deposits when they haven't really come clean on what went wrong." Which is exactly what Cyprus is doing with its banks right now. They've frozen most of the assets of their depositors and are taking a percentage of the existing accounts. And still no one wants to actually analyze the problem to see what's wrong.. the answer is simply "throw more money at it."
- caseysoftware 14y ago
  coughCyruscough

101 points by dopamean 14y ago

logn 14y ago

Did you post the URL in the wrong field?

lowboy 14y ago
Nope, looks great.
dopamean 14y ago
When I put the URL in the URL field it forwarded me to a post a few months ago about Intrade ceasing trading. The latest announcement and that announcement a few months ago were both put on the Intrade homepage so I guess the forum thought I was reposting something.
- derefr 14y ago
  Yes; what people usually do in response to this is to add a query string--e.g., http://www.intrade.com/v4/home/?ohno http://www.intrade.com/v4/home/?ohno
  - dopamean 14y ago
    I'll remember that for the future. Thanks.

alex_doom 14y ago

Golly gee, I wonder where it went!

rorrr 14y ago

There's no way that announcement will cause panic and everyone attempting to withdraw their funds. They are royally fucked. EDIT: And how exactly do you misplace $700K at such early stages?

late2part 14y ago

Is the forbearance agreement the business equivalent of the "Don't Tase Me Bro!!"?

Ovid 14y ago

Reminds me of the time I worked for one company and prior to going public, we called in some Sarbanes-Oxley consultants to vet us. After a thorough SOX compliance effort (which was ridiculous - one recommendation was "print out all source code and file it"), I showed up one day and an accountant in the corner had disappeared. Seems that he had a gambling problem, but was allowed to both cut checks and sign them (fall into the GAAP). He embezzled, IIRC, close to one million dollars and was only found due to the SOX compliance effort.

nhaehnle 14y ago
Are you able to discuss in more detail what exactly helped find him?
- eps 14y ago
  Your good old financial audit. Debits must match credits, and all debits must make sense.
  - e40 14y ago
    It's a little scary that SOX was required to force them to do this... that company was run very poorly, IMO.
    - njharman 14y ago
      They were doing it, they being the embezzling acct.
- Ovid 14y ago
  I honestly haven't the foggiest idea, sorry. The company only told us the bare minimum because they were trying to contain the damage.
jacquesm 14y ago
> After a thorough SOX compliance effort (which was ridiculous - one recommendation was "print out all source code and file it"), If they found that rogue accountant it wasn't all that ridiculous after all. That one requirement was (probably, I don't know the context) ridiculous but the compliance effort apparently wasn't. On another note, I have had a customer a while ago that would have been extremely happy if they had had a printed, filed copy of all their source code.

johnw 14y ago

Sounds like the writings been on the wall for a while now. They were fined by the CFTC in late 2012 and had to withdraw from the US market for not being a licensed exchange [1]. Most of their customers were in the US so this was a major blow to their business. I wonder if there's an opportunity here for a Bitcoin based predictions market? [1] http://motherboard.vice.com/blog/how-the-us-killed-intrade http://motherboard.vice.com/blog/how-the-us-killed-intrade

stuhood 14y ago
Haven't used it, but http://betsofbitco.in/ http://betsofbitco.in/ seems to have some traction.
- foobarqux 14y ago
  That is not a prediction market since there are no prices.
nandemo 14y ago
It looks like their demise was due to fraud/embezzlement. Not sure how bitcoin would help here. Also, users of such an exchange would be heavily exposed to the volatility of BTC/$major_currency when making long-term bets. Unless one doesn't care about currency risk, but it's not easy to ignore it unless as long as one's future expenses are still pegged to $major_currency.
- makomk 14y ago
  Based on past Bitcoin businesses, Bitcoin could help here by making the fraud and embezzlement harder to catch.
- eric_bullington 14y ago
  The Bitcoin protocol has built into it a sophisticated scripting component which would make it possible to make multiparty contracts (like those on a predictions market) that could not be broken by any means, other than an attack on the underlying Bitcoin protocol. It hasn't yet been fully implemented in any client, but it's there to be used whenever the devs feel comfortable putting it in. This feature has the potential to make Bitcoin fraud/embezzlement much more difficult than it is now.

eps 14y ago

rorrr, you are hellbanned.

anthonyb 14y ago
...and for good reason too. Go back and read his comment history before you warn him.
- tome 14y ago
  Why do commenters feel the need to point out hellbanning? It seems to defeat the whole purpose.
  - sp332 14y ago
    Sometimes users get hellbanned for no good reason. I was hellbanned for a few days and only noticed because I knew what to look for. I emailed info@ycombinator.com and they said it was an accident, and reinstated me. I agree with anthonyb though, you should probably make sure they're not actually trolls before pointing it out.
    - niggler 14y ago
      The reason for hellbanning is https://news.ycombinator.com/item?id=5413912 https://news.ycombinator.com/item?id=5413912 "Adria Richards is an evil cunt. SendGrid is a shit company that I would never want to work for." Not exactly stellar material.
      - anthonyb 14y ago
        No need to inflict it on random passers-by though :P
    - comex 14y ago
      This is why bans should start with a warning - hellbanning may be efficient from an administration perspective, but among other issues, without the possibility of appeal it's fundamentally unfair and prone to mistakes. (The ability of users to appeal after noticing something you're explicitly trying to hide from them isn't really adequate.) But yes, this ban is probably deserved.

benaston 14y ago

Are they not insured?!

adaml_623 14y ago
Is it possible to get insurance against embezzlement?
- ratsbane 14y ago
  It is. It seems weird, but there it is... http://en.wikipedia.org/wiki/Fidelity_bond http://en.wikipedia.org/wiki/Fidelity_bond
- tlrobinson 14y ago
  It's possible to get insurance against almost everything, the question is how much are you willing to pay?

gdeglin 14y ago

I remember being perplexed looking at the intrade exchange pricing during the last presidential election. I wasn't the only one. Nate Silver and Paul Graham wondered about it too http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-the-virtues-and-vices-of-election-prediction-markets/ http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-t... https://twitter.com/intent/retweet?tweet_id=261513897134141440 https://twitter.com/intent/retweet?tweet_id=2615138971341414... The bets on Obama not being re-elected seemed way too high. I convinced myself at the time that this must have been due to either personal bias or perhaps a strong republican leaning userbase on Intrade. But now it's starting to seem like it may have been part of some scam.

teleological 14y ago
I assumed this was because a pool of funds had been set up to prop up Romney's odds to make him appear more viable -- or at least to stave off a story that Intrade users were betting heavily against him. Intrade was a small enough market that this could have been done with a comparatively small investment compared to media buys, and without any technological or financial chicanery. It's not illegal to pay too much for something that could have been had for less.
- deleted 14y ago
  [deleted]
sesqu 14y ago
Query version of the Twitter link: https://twitter.com/paulg/status/261513897134141440 https://twitter.com/paulg/status/261513897134141440
gwern 14y ago
It would be elegant and pleasing if we could resolve both mysteries with one stone, but I don't see how it's supposed to work. How does a Romney anomaly lead to $700k embezzled and Intrade suing 2 different parties for $3m+?

NelsonMinar 14y ago

Anyone have a copy of the proposed forbearance agreement for large account holders? It seems pretty brazen to ask people to give the company some slack on repaying deposits when they haven't really come clean on what went wrong. "For legal reasons we are not yet at liberty to document them" isn't good enough explanation; an announcement of specific arrests or civil lawsuits might be.

derefr 14y ago
Not tipping someone off that they're about to be arrested constitutes "legal reasons."
- NelsonMinar 14y ago
  Arrest first, ask for your creditors to give you a break second.
  - UnoriginalGuy 14y ago
    That's a nice idea, but what if they go out of business before the arrests are made?
    - caseysoftware 14y ago
      Typo on my part. My comment was in reference to this: "It seems pretty brazen to ask people to give the company some slack on repaying deposits when they haven't really come clean on what went wrong." Which is exactly what Cyprus is doing with its banks right now. They've frozen most of the assets of their depositors and are taking a percentage of the existing accounts. And still no one wants to actually analyze the problem to see what's wrong.. the answer is simply "throw more money at it."
caseysoftware 14y ago
coughCyruscough