InTrade, the first prediction market with 50m+ users and $200m+ wagers
Tardis (historical crypto data), Options, BTC Minings, Deribit, Binance, Bitcoin Suisse IPO, FunFair, Ubisoft, EURO AML Law and much more!
|Etienne Brunet||Jan 12|| 3|
Thank you for supporting the European crypto ecosystem 🇪🇺.
This week I look into InTrade (prediction market), Tardis (historical crypto data) and the usual curated EU news.
Don’t hesitate to contact us regarding new products launch or partnership.
Etienne ( Twitter, email@example.com)
ps: don’t hesitate to send me an email if you enjoy this newsletter, Always great to have feedback :)
🕵️ InTrade, the first prediction market with 50m users and $200m+ wagers.
While reading the book by Blockhead called, Seat Open - A memoir of Poker, degeneracy, and Friendship, It reminded me of InTrade
InTrade was founded in 1999 and later acquired in 2003 by Tradesports who operated the websites Intrade.com, Tradesports.com, WallStreetSports.com, Prediction-X.com
Intrade's system was one of the first prediction market trading exchange. Members could take positions (trade 'contracts') on whether future events will or will not occur. This could include a political election, climate change, current events or entertainment etc…
Because events took place over a well-defined time span and have a well defined outcome, traders can trade both before and during an event. The political elections were really the main blockbusters
Regulatory uncertainties and product market fit
InTrade was operated from the Republic of Ireland and in 2005 applied to the U.S. CFTC for permission to open a regulated futures exchange in the United States. But the CFTC did not give much insight and in 2008 the company decided to send a letter:
"While Intrade serves a global community and has registered members from 162 countries, our 82,000 plus membership are predominantly resident in the United States ... it is perversely unclear as to whether Intrade, and indeed myself, are considered persona gratis by the United States”
The 2012 US presidential election was a bellwether media event for Intrade with web traffic of 50m+ monthly page views in October and November and 100+ of media mentions related to the accuracy of the Intrade markets. During the 2012 election, related contracts represented over $200 million worth of wagers
On 26 November 2012, the CFTC filed a civil suit in federal district court in Washington, D.C. for unregulated trading in traditional commodities seeking an injunction against Intrade allowing U.S. citizens to trade on their site
The US CFTC claimed that Intrade's operation interfered with the CFTC's role "to police market activity and protect market integrity". The CFTC shared that it was illegal to sell futures contracts in the US without being a US registered exchange or with a special exemption
On 23 December 2012, Intrade closed all US-based member accounts. Trading volumes suffered a dramatic decrease without participation from US customers. On 10 March 2013, Intrade suspended all trading
In addition to regulatory challenges, the company faced other problems including the death of its CEO, John Delaney, and potential market manipulations due to outsize bets on presidential-election contracts that may have distorted the market in 2012
Unlike other platforms, the monetary incentives brought people into a market ensuring liquidity and making the market efficient
The ‘new InTrade’ is called PredicIT and was started in 2014. Unlike InTrade, it is setup as a nonprofit educational project by the Victoria University of Wellington, New Zealand. The company also secured a no-action letter from the CFTC
Though this has come with some restrictions including max 5k traders per questions and a cap of $850 per user per question. These limitations seems to affect the market efficiency of the system and create some 'arbs’. Nevertheless, PredicIT is often described as the most robust prediction markets
Also started in 2014, August is a decentralized oracle and peer to peer protocol for prediction markets. Its protocol based on Ethereum is free, public, open source software. In many ways, Augur seems the logical next step for prediction markets leveraging an open platform and features such as arbitration market and automatic betting. The latter is less discussed (at least on my knowledge) but seems important. Bots could automatically give predictions based on models increasing the liquidity and volume and thus the veracity of predictions. More on this on a great post by ConsenSys. Some great companies like Guesser are building on top of Augur.
For many InTrade users, the 2012 election was a challenging experience as many US users were not able to retrieve their funds due to the CFTC enforcement. Not your key not your coin! I let you read Seat Open if you want to learn how the author was able to retrieve his winning bet ;)
/ la fin
🐦 Tweets of the week
This week many exchanges have launched option such as FTX, OkEX and CME. The latter is the one to watch as it should attract regulated institutions
Meanwhile, the mining difficulty fell from 13.7 trillion in November to 13 trillion in December – the first downward adjustment in 12 months.
Hence, we may have hit the bottom.
A monthly mining difficulty decrease is essentially the result of a slide in the hash rate caused by small and marginal miners shutting down operations during sustained market sell-offs and dwindling mining profitability [Source]
🔮 Product of the week: Tardis (Historical tick-level data for cryptocurrency markets)
Problem: Where can I find tick-level market data replay and real-time streaming support for crypto exchanges delivered in API or CSV exports?
For who?: Researchers, investors, quant funds, OTC desks etc…
Why?: Ask anyone who had done any sort of crypto trading and they will tell you that connecting to any crypto exchanges is a nightmare. The docs are wrong, outdated etc… On the other hand, crypto is a data-driven market and you need to have access to full order book for backtest and research. Even though, I would recommend anyone to run their own tick level data, it could be helpful to use Tardis as a benchmark
Yeah but there are a bunch of others like Kaiko, Nomics etc..? Tardis has one of the most flexible pricing from $749 /month unlimited to $69/month. They also have a strong breadth of exchanges 20+, and are developers focus. Some of the top quant traders I know are using them. So yeah, at the end data is data. But most providers like Kaiko and Nomics are moving upstream and focus on enterprises
Don’t hesitate if you have feedback!
🤹 Startups News
Deribit is moving to a "warmer" area, citing regulatory concerns. The Amsterdam-based crypto derivatives exchange will operate out of Panama as DRB Panama, a subsidiary of the current Deribit platform beginning Feb. 10th [Source]
Binance Europe’s head of operations has left the exchange and is joining Hong Kong-headquartered cryptocurrency exchange Crypto.com as a general manager for Europe [Source]
Bitcoin Suisse, a crypto-broker, plans expansion by going public. Before going public it must obtain a Swiss banking license (they expect to receive it later this year.) Also, they must increase the company’s capital, the company seeks to raise ~$40m USD from its investors. Swiss regulators demand a company to have a large amount of capital as a backup for its business [Source]
A Russian state-owned atomic energy corporation opened a mining farm 200 miles NW of Moscow, near the Kalinin nuclear plant. The company spent more than $4.8m building the 30-megawatt facility. It won’t be mining itself, but only selling the electricity to miners. The head of ‘Data centers thesis is about "Both data centers and miners are large energy consumers with a stable demand. For us, it's a way to diversify." [Source]
🎁 Startups Product & Partnership
FunFair ramps up commercial ambitions for 2020: Started a B2C in-house casino, CasinoFair. Its first, FunFair Group-run white label casino was soon joined by externally operated Crypto Casino and just before the holidays, KingTiger. It’s likely that more ‘crypto casino operators’ launch applications based on FunFair technology. Since its launched, the platform had about 19m of FUN token profit equivalent to about $54k at today price [source]
Malta-based cryptocurrency exchange Binance has added a flurry of new fiat funding options since the first of the year including faster payments for U.K. pounds-bearing customers [Source]
Starting in May 2020, the next season of the Ubisoft Entrepreneurs Lab will last until November 2020 and will focus on two main fields: Blockchain and Social Entertainment. This program is free for the selected ventures, and it will be held both in Paris and Singapore [More info]
🏦Regulations / Universities
European crypto firms brace for higher costs as new Euro AML law is officially enforced. The new rules require Euro crypto exchanges and custodial service providers to register with their local regulator and demonstrate compliance with thorough KYC and AML procedures. These regulations are likely to increase costs to exchanges, possibly forcing some to shut down or move to other jurisdictions [Source]
1/ U.S.-based exchanges that also operate in Europe, have already done their homework
2/ Some Euro-centric businesses still show cause for concern. As some businesses may not be prepared to ensure they are compliant in every single country where they may operate across the EU. Exchange businesses operating in multiple EU member states need to ensure they are covered by applying for the appropriate licences in every jurisdiction
A recent news related to this regulation is the cryptocurrency derivatives exchange platform Deribit.com no longer operating by the Dutch company Deribit B.V., but by DRB Panama Inc., a 100% subsidiary of the Dutch entity [Source]
SEC Produces Evidence That Telegram Kept Selling Tokens After $1.7B ICO. These documents undermine Telegram’s claimed affirmative defense that the Offering was exempt under Regulation D. [Source]
According to the invoices presented by the SEC, Da Vinci Capital sold over $2 million worth of grams to a fund managed by its portfolio company, ITI Funds, on June 20, 2018. Gem Limited sold 7.8 million euros ($8.6 million) worth of grams to a firm named Goliat Solutions and $4.5 million to Space Investments Limited on July 2, 2018.
The UK’s Financial Conduct Authority (FCA) is poised to take a larger role in crypto matters, having assumed new supervisory roles with regards to crypto assets. The FCA will require all crypto asset businesses to adhere to several new preventative measures and policies aimed at curbing abuse [Source]
Qatar is cracking down on "alternative value transfer channels" (Crypto.) Bitcoin nodes are still operational there despite Middle East tensions [Source]
💰Fundings & M&A
Millennials-focused trading app provider BUX acquired bankrupt crypto exchange Blockport for undisclosed sum. Blockport will be rebranded to BUX Crypto and launch operations in Q1 of this year, according to an announcement shared with The Block on Thursday. One operational, BUX users will be able to trade cryptocurrencies, including bitcoin (BTC), ether (ETH) and XRP [Link]
A New York investment firm, Argo Partners, wants to buy claims from former QuadrigaCX users – provided there's enough interest from creditors entitled to assets held by the infamous exchange [Source]
About the author: Etienne used to head principal strategic investment (Companies, Funds and token investment) at Elwood, One of the largest European digital assets investment firm spun off of Brevan Howard, billion-dollar Macro Hedge fund. Previously, he was part of the founding team at the largest Capital Markets Venture Fund in London, Illuminate Financial.