PredictIt, a platform that allows customers to wager on political and financial events, is under fire by US regulators that seek to shut down the exchange. In response, the exchange filed a lawsuit, which still continues. Amid the heated battle between PredictIt and the Commodity Futures Trading Commission, the exchange’s deadline to respond to a letter from the latter body was extended.
As reported by Casino.org, PredictIt received a letter from the CFTC on March 2, in which the regulator emphasized that it has rescinded an August 2022 notice. In the notice in question, the CFTC said it was pulling the 2014 no-action letter. The no-action letter allowed PredictIt, which would under normal circumstances be illegal in the US, to operate as an exception for non-commercial purposes.
The CFTC accused PredictIt of certain violations, claiming that the exchange broke the terms of the no-action letter.
However, the Victoria University of Wellington, the body behind the exchange, failed to meet the deadline to respond to this letter. Initially, the CFTC expected a response by Monday, March 20. However, this has been extended to April 5, 2023, providing PredictIt and its founders with more time to respond, a spokesperson told Casino.org.
The CFTC Might Be in More Trouble than PredictIt
In the meantime, the CFTC hopes that the Fifth Circuit would lift an injunction that was placed on the commission earlier this year. The injunction was requested by PredictIt and other plaintiffs, including Aristotle International, and allows the marketplace to remain open. However, the CFTC argues that now that its original letter has been revoked, the injunction should be invalid.
The CFTC recently scrutinized the plaintiffs for not sharing that they knew about CFTC’s claims before its letter in August. PredictIt and the plaintiffs, on the other hand, slammed the CFTC for never bringing that up before, saying that the commission has had more than seven fillings in which it could have divulged that information.
The plaintiffs will now try to find the CFTC in contempt for what they believe violates the injunction. They believe that it is too late to dismiss the case now. The plaintiffs noted that injunction violations have consequences that go beyond an apology. As a result, the plaintiffs will seek their attorneys’ fees and costs associated with “nervous investor behavior” covered.
In an interview with a Casino.org journalist, Pratik Chougule, a prominent trader on PredictIt, said that the ongoing case has impacted the exchange’s business, causing liquidity in the markets to decline. Still, he believes that the situation is calming down and urged traders not to be reactionary and stick with PredictIt for the moment.
While Chougule believes in PredictIt, he accused its organizers of poor communication with their traders, to which he attributed traders’ initial panicked reaction. He also said that PredictIt should lower its withdrawal fee or remove it altogether.