

Intrade discovers a $700k cash shortfall - dopamean
http://www.intrade.com/v4/home/

======
Ovid
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
Are you able to discuss in more detail what exactly helped find him?

~~~
eps
Your good old financial audit. Debits must match credits, and all debits must
make sense.

~~~
e40
It's a little scary that SOX was required to force them to do this... that
company was run very poorly, IMO.

~~~
njharman
They were doing it, they being the embezzling acct.

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gdeglin
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-t...](http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-the-
virtues-and-vices-of-election-prediction-markets/)

[https://twitter.com/intent/retweet?tweet_id=2615138971341414...](https://twitter.com/intent/retweet?tweet_id=261513897134141440)

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
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.

------
NelsonMinar
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
Not tipping someone off that they're about to _be_ arrested constitutes "legal
reasons."

~~~
NelsonMinar
Arrest first, ask for your creditors to give you a break second.

~~~
UnoriginalGuy
That's a nice idea, but what if they go out of business before the arrests are
made?

~~~
caseysoftware
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."

------
johnw
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>

~~~
nandemo
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.

~~~
eric_bullington
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.

------
alex_doom
Golly gee, I wonder where it went!

------
logn
Did you post the URL in the wrong field?

~~~
dopamean
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
Yes; what people usually do in response to this is to add a query string--
e.g., <http://www.intrade.com/v4/home/?ohno>

~~~
dopamean
I'll remember that for the future. Thanks.

------
benaston
Are they not insured?!

~~~
adaml_623
Is it possible to get insurance against embezzlement?

~~~
ratsbane
It is. It seems weird, but there it is...
<http://en.wikipedia.org/wiki/Fidelity_bond>

------
eps
rorrr, you are hellbanned.

~~~
anthonyb
...and for good reason too. Go back and read his comment history before you
warn him.

~~~
tome
Why do commenters feel the need to point out hellbanning? It seems to defeat
the whole purpose.

~~~
sp332
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
The reason for hellbanning is <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
No need to inflict it on random passers-by though :P

------
late2part
Is the forbearance agreement the business equivalent of the "Don't Tase Me
Bro!!"?

