Intrade Faces $700,000 Cash Shortfall; Possible Liquidation

[CaseyJones]

http://blogs.wsj.com/marketbeat/2013/04/06/intrade-faces-700000-cash-shortfall-possible-liquidation/


Online prediction betting site Intrade said late Friday that it faces a $700,000 cash shortfall and possible liquidation, an announcement that comes less than a month after it halted trading on its website and froze customer accounts amid federal scrutiny.

“We have now concluded the initial stages of our investigations about the financial status of the company, and it appears that the company is in a cash ‘shortfall’ position of approximately US $700,000,” said Ronald Bernstein, a director at Intrade, on the company’s website. “If the company is not able to rectify this cash shortfall position very quickly, the Company will become insolvent and therefore is very likely to go into liquidation.”

The Irish company — known for creating offbeat betting markets on everything from presidential politics to the Academy Awards — abruptly closed its doors for all trading last month, a move that came after it said in November it would no longer accept bets from U.S. residents. Last year’s decision was made just hours after U.S. regulators filed a civil complaint against the firm over its commodities-focused markets.

more at link ^

[itshappening]

They've been run out of business.

[MoneyWhereMyMouthIs2]

They've been run out of business.


Maybe so, but they're supposed to be making money on juice like any gambling operation. I don't understand why they'd have a 700k shortfall. Where'd it go?

[MRK]

Maybe so, but they're supposed to be making money on juice like any gambling operation. I don't understand why they'd have a 700k shortfall. Where'd it go?

The 88888 account :D

http://en.wikipedia.org/wiki/Nick_Leeson

[itshappening]

The money has probably gone on fighting the US gov't!

Legal bills.

[Zippyjuan]

The founder may have taken a big chunk of it.
http://money.msn.com/now/post.aspx?post=a798d5c9-546b-42b0-81d9-b883db100f78


The site, based in Ireland, suddenly stopped all trading activity this week, and posted a notice for customers that suggested "financial irregularities" were to blame. The site closed all open contracts their fair market value on Sunday.

Some of the problems may relate to $2.6 million in insufficiently documented payments to its founder, The Financial Times reports. The founder, John Delaney, died while attempting to climb Mount Everest in 2011.

[MoneyWhereMyMouthIs2]

The money has probably gone on fighting the US gov't!

Legal bills.


They would be eager to point that out.




The founder may have taken a big chunk of it.
http://money.msn.com/now/post.aspx?post=a798d5c9-546b-42b0-81d9-b883db100f78


If so, his estate should be paying up.

I've never had an intrade account, so these things are purely academic for me, btw.

[Zippyjuan]

There is also concern that accounts which should have been separate were mingled- money from customer accounts being used to pay other bills.

http://marketfailure.wordpress.com/2013/03/12/intrade-unintended-consequences/

Why is Intrade shutting down? Their shutdown notice is somewhat cagey, saying that “due to circumstances recently discovered, we must immediately cease trading activity.” Those circumstances “may include financial irregularities”. Almost certainly this means that there was a breakdown in fund segregation. Like brokerage firms, online bookies are supposed to have “segregated” accounts, meaning that customer’s money is never ever ever touched for operational expenses. That is, for example, a big part of the story of the fall of brokerage firm MF Global. If I had to guess, judging from the tone of the letter, it sounds like someone was siphoning off customer funds – either to conceal losses in other parts of the business or as an embezzlement tactic.

[MRK]

Can I make an intrade bet on whether or not the company will go into liquidation?

[MoneyWhereMyMouthIs2]

Can I make an intrade bet on whether or not the company will go into liquidation?



You'd have to make that bet on extrade.