The U.S. government is poised to ratchet up insider trading enforcement around prediction markets amid growing scrutiny, Noah Solowiejczyk recently told Law360.
"I honestly think that the tools are there, the statutes are there and the regulations are there,” he told the outlet. “The bigger issue is surveillance, detection ... and building the tools to actually spot and catch these sorts of incidents."
Regulators could also adapt crypto enforcement tools to address activity on platforms that let traders do so anonymously.
"It might be that they're using a playbook that resembles the playbook that they used when they started thinking about crypto, but they probably have to make some changes as well," he told Law360.
Prediction market platforms allow traders to make event contracts that wager on the outcome of real-world events. And even someone outside the U.S. who uses a non-U.S. platform could be charged if prosecutors can assert the contract itself has a U.S. nexus, Law360 reported.
"I think those [kinds of contracts] very well could fall within the U.S., especially if, hypothetically, the insider information is originating from the United States, from someone who had been in the United States," Solowiejczyk told the outlet. "I would think that's something a court would have to consider when determining whether the statute should apply, because the actual initial source of the information is in the United States."
Read the full article at Law360.