I mentioned a potential OpenAI insider in https://x.com/peterjliu/status/2024901585806225723, that was from 5 minutes of investigation. There are probably more. And then there's a lot of other companies.
Manifold actually explicitly encourages insider trading, arguing that it leads to more accurate pricing. This was possibly defensible back when it was a cute funtime project run by a Bay Area polycule, but it’s probably going to get them in deep shit sooner or later, even though they don’t even use real-money betting.
The vast majority of insider trading schemes are not prosecuted, many leave no evidence trail at all without going deep into black-op classified territory.
Thanks for making me aware of another federal agency :)
Seems to me prosecuting or regulating this sort of activity is futile, and pretty much serve only the interests of the mob. These markets make additional data open source, which otherwise might exclusively belong only to mob, so that's pretty cool. We democratized buying airstrikes.
It You may know how bad things really are, but if you don't, the lawboys are pretty much just playing pretend at this point, and have been for a while.
Mob wants me to add: if you try to buy an airstrike with our very based and functional cryptocurrency systems, you will probably just find mob. We have mob priced in, anybody with a significant amount of cryptocurrency knows this too.
It's not as simple as "buy an airstrike" comrade (we are referencing the person writing this post)
A fun aside: this person obviously created a bunch of new Bitcoin accounts to hide their activity.
It makes you think that if you were able to surreptitiously add malicious side channel software into a popular npm package that you wouldn't just need to hunt for crypto wallets with balances.
You could also probably find a market for crypto wallets with small balances or zero balances. The history and date of creation would be the value to some.
This openai employee should have gone on the dark web to buy older addresses to cloak their activity.
It's sad to say that almost all crypto use cases point to fraud. I'm excited about crypto and there is some fascinating research around anonymous transactions (like zcash). But, that real utility is always overshadowed by the actions of charlatans or worse.
you can't "change the password" on a wallet, so a "used" wallet is highly unattractive. anything you put in it could be taken by the original keyholder who sold it to you.
Oh but you can. You can swap out the seed and generate any new addresses using that.
Yes, the old addresses will be compromised. That's fine. The point is that nobody can tell that you aren't actually using the same keys to generate new addresses anymore.
Right but if you have the forethought to go buy such a wallet, you could just make one yourself in advance and create a transaction history.
Although I would argue that even this doesn't have much value. It's not a big problem that people know "there exists an insider at OpenAI". There are plenty of employees there that shield you from being discovered.
In fact it would be so difficult to find this person among them, assuming the most basic opsec, that I'm highly skeptical they actually fired anyone. I would sooner assume this is just an announcement designed to discourage the behavior, since no specifics are provided.
You are giving a lot of credit to this criminal. I really doubt they thought about this long in advance of the crime. Are you suggesting they got hired at openai so they could make calculated wagers at Kalshi? This was more likely a crime made impulsively.
First of all I'm not sure what they did is criminal. And it would have been Polymarket.
Nonetheless, you can just be a pre-existing OpenAI employee. As long as you take basic precautions, they (as in, OpenAI), are not going to be able to find out it was you.
Not in this context it's not. Companies can't create Polymarket accounts. Polymarket accounts are just email addresses or alternatively crypto wallets. And there's no purpose I can imagine to aging them.
77 suspicious positions across 60 wallets, 13 brand-new accounts appearing 40 hours before the browser launch. First confirmed case of a major tech company firing over prediction market trades.
It's interesting that the both replies under this comment are saying exact same thing, with the exact same term ("raison d'etre"... how often do you hear two random people think of this phrase at the same time?).
It might be nothing, but it'd be funny if karma farming bots are doing some 'reply frontrunning' over the internet.
I don’t consider “raison d'etre" a suspicious phrase. It’s not something people use multiple times a day, but I’d consider it common enough that when I hear someone say it, or in this case I suppose type it, that I would give it a second thought.
Yeah but someone has to give the money to the insider traders.
Betting and insider gambling wouldn’t work if people were educated and just didn’t gamble and so never used these platforms in the first place.
It’s an old question of whether government is responsible to protect people from themselves or should we give everyone freedom to go bankrupt in this specific way if they so desire.
I don’t know if there is a healthy way to gamble really. With drugs and substances at least there is some continuous spectrum but you either gamble your money or not.
Many, I suspect the overwhelming majority, of the markets are impossible to engage in insider trading in. So it's genuinely just an interesting way to monetize expertise. Chess is a great example. A lot of the money in that market is people turning on the latest chess engines and betting in accordance to position evals, but skilled players can see much more - like how a position that the computer gives as a dead drawn is, in reality, extremely difficult for one side to hold. So the market might give near 50% when it's perhaps more like 65/35. That's quite a large edge. There's also quite a lot of opportunities for arbitrage betting, which is by definition risk free.
The majority of people can’t even control their daily screen time, yet we are supposed to believe they can masterfully restrain their urges when money and dopamine are on the line? Nothing I’ve seen indicates human impulse control is that bulletproof. Furthermore, the 'I have it under control' narrative isn't proof of a healthy habit; it’s practically the universal slogan of active addiction.
Would you not say that somebody could equally cynically describe options trading in this way?
Prediction markets are very valuable because they provide information on issues that's generally much more accurate than alternative sources, such as polls. For instance Polymarket predicted 94% of the results for the 2024 election a month out, including the presidential. It can also provide more information than the news. For instance the chances of Khamenei being out as Supreme Leader of Iran by March 31st just skyrocketed up to 78%. That tells me far more than the various news sites minute by minute coverage.
Gambling = investing. Buying stocks is also gambling. Share buybacks, dividends, fancy words for forking money from workers to some joe schmoe that bought a lottery ticket, i.e., a stock.
The concept of a valuable service falls apart if players can influence the actual event. Without equal footing and basic honesty, you aren't measuring reality so much as you are subsidizing those with the power to manipulate it.
There's a feel good story where a parent can't afford a very expensive medical procedure to save a child, so someone tells them to place a massive bet in a prediction market for a certain event that may happen, and then they make it happen, therefore siphoning off money from the other gamblers for a good cause. Just a small way everyday people use the system against itself as a way to survive.
Prediction markets have only events whose outcome is eventually publically resolved, by design. With insider trading, the trader is incentivized to release the information as late as possible, as close as possible to the events.
Why are these big insider bets being placed within hours of the event actually occurring? The insiders are doing the equivalent of bid sniping — waiting until the last possible moment to exercise.
This is how inside info works in trading markets in general. And again this is inevitable and by design.
It also makes them largely useless, because the timeline for which useful position is shared is compressed to the point where nothing useful can be gleaned from the information.
The thing is a “lie incentiviser” — a market entirely for suckers. That’s why 95% of volume is sports betting.
That’s setting aside insider positions having an influence on the outcome of events which is a whole separate problem.
> Why are these big insider bets being placed within hours of the event actually occurring?... It also makes them largely useless
They're not, usually. The more the outcome seems unlikely at first, the more you're incentivized to place your big bet earlier, when the odds seem worse, because you'll make a ton more money.
When these bets are placed only a few hours beforehand, that's often because the actual decision hasn't actually been made until then.
And there are plenty of areas where having notice of an hour or two is still hugely vulnerable.
why are publicly traded companies special? The speculation is not on securities.
You're not participating in a "market" (even though they call it that), you're purely gambling and speculating. People have been doing this since currency was a thing. Even gambling laws don't apply in my opinion. If I told you the government will publish evidence of aliens existing tomorrow, and we make a bet on it, that's not really gambling, it's not so much a game of choice as it is a competition of who can predict things better. The other person might have insider knowledge, but it's up to you to either take on that risk or assume despite that your knowledge about the topic will overcome their potential insider knowledge.
If you see prediction markets as how they were originally pitched (price ~approximating likelihood), then insider trading is good. It provides discovery.
If you look at what prediction markets are today (gambling, especially on sports, especially in states that have banned it), then insider trading is bad. Particularly when the people trading can influence the outcome (e.g. a pitcher purposefully throwing into the dirt.)
I do hope corporations in general take a harder stance on this. From a society perspective people with inside knowledge fleecing randoms is not a win. We've got that somewhat under control on the stock exchange, but have this absurd situation where on prediction markets it is a free for all and everyone pretends this is fine.
I also think corporations should distance themselves from individuals willing to fleece randoms. Trading in general is very wild west survival of the fittest but active exploitation of insider knowledge speak of very poor morale character
Honestly it seems stupid but fine to me. Like if someone random comes up to me on the sidewalk and says hey if OpenAI announces a browser tomorrow, you give me $100. If not I'll give you $1000. Obviously I'm not going to take them up on it, they clearly have inside information.
If you're betting on a prediction market without insider information then you're just... The fool who is soon parted from his money one way or another.
I generally feel like people should be free to do whatever insane stuff they want with their own lives.
> I generally feel like people should be free to do whatever insane stuff they want with their own lives.
The problem with people doing insane stuff with their "own money" is the burden they often exact on their family or society.
Perhaps the realm of independence starts when loans are reasonable and current, there is sufficient child support, and they are meeting a base savings rate for their retirement.
Speaking of which, perhaps any UBI could also use a minimal criteria, reviewed annually but without any barriers on first year eligibility.
Who would think that? At every corporation where I've worked it's been explicit in both the contract and in HR training that this is explicitly not allowed.
> The employee, she said, “used confidential OpenAI information in connection with external prediction markets (e.g. Polymarket).”
Note that “insider trading” is not illegal on prediction markets. The particular issue here is that the employee “disclosed” confidential information on a public forum by influencing the prices assigned to certain outcomes by prediction markets.
I don't think this is true, though enforcement is another thing and the standard is different than in securities markets. Prediction markets are regulated by the CFTC and the insider trading standard is “misappropriation of confidential information in breach of a pre-existing duty of trust and confidence to the source of the information” (vs any “material non-public information” for securities) https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstateme...
I find it absurd that someone can create an unregulated market like Kalshi, and then all of us need to be beholden to it, even though the idea is stupid. How is it possible that someone can create a product that none of us agree on, and now everyone else has to conform to the rules around it because of the problems that it creates. I would rather Kalshi get shut down than the precedent of allowing this to control employees or people.
I mentioned a potential OpenAI insider in https://x.com/peterjliu/status/2024901585806225723, that was from 5 minutes of investigation. There are probably more. And then there's a lot of other companies.
Interestingly Kalshi has ‘banned’ insider trading, whilst polymarkets often tweets that some of their users must have inside information
https://news.kalshi.com/p/kalshi-trading-violation-enforceme...
https://x.com/polymarketmoney/status/2001056273500954784?s=4...
Manifold actually explicitly encourages insider trading, arguing that it leads to more accurate pricing. This was possibly defensible back when it was a cute funtime project run by a Bay Area polycule, but it’s probably going to get them in deep shit sooner or later, even though they don’t even use real-money betting.
The SEC only exists for dad to frame people.
The vast majority of insider trading schemes are not prosecuted, many leave no evidence trail at all without going deep into black-op classified territory.
Prediction markets are regulated by the CFTC in the US.
Your point stands, for now at least, since the CFTC seems entirely uninterested in prosecuting or regulating.
Thanks for making me aware of another federal agency :)
Seems to me prosecuting or regulating this sort of activity is futile, and pretty much serve only the interests of the mob. These markets make additional data open source, which otherwise might exclusively belong only to mob, so that's pretty cool. We democratized buying airstrikes.
It You may know how bad things really are, but if you don't, the lawboys are pretty much just playing pretend at this point, and have been for a while.
Mob wants me to add: if you try to buy an airstrike with our very based and functional cryptocurrency systems, you will probably just find mob. We have mob priced in, anybody with a significant amount of cryptocurrency knows this too.
It's not as simple as "buy an airstrike" comrade (we are referencing the person writing this post)
Though Manifold only uses their non-withdrawable play currency Mana.
A fun aside: this person obviously created a bunch of new Bitcoin accounts to hide their activity.
It makes you think that if you were able to surreptitiously add malicious side channel software into a popular npm package that you wouldn't just need to hunt for crypto wallets with balances.
You could also probably find a market for crypto wallets with small balances or zero balances. The history and date of creation would be the value to some.
This openai employee should have gone on the dark web to buy older addresses to cloak their activity.
It's sad to say that almost all crypto use cases point to fraud. I'm excited about crypto and there is some fascinating research around anonymous transactions (like zcash). But, that real utility is always overshadowed by the actions of charlatans or worse.
you can't "change the password" on a wallet, so a "used" wallet is highly unattractive. anything you put in it could be taken by the original keyholder who sold it to you.
Oh but you can. You can swap out the seed and generate any new addresses using that.
Yes, the old addresses will be compromised. That's fine. The point is that nobody can tell that you aren't actually using the same keys to generate new addresses anymore.
This is no different on the outside from making a new account.
just move it to a new wallet
I don't really understand. You can create wallets at will. What would be the value of one that someone else happened to create?
If it has a small transaction history it obscure the owners intentions. An address created right before a wager is obviously for one purpose.
Right but if you have the forethought to go buy such a wallet, you could just make one yourself in advance and create a transaction history.
Although I would argue that even this doesn't have much value. It's not a big problem that people know "there exists an insider at OpenAI". There are plenty of employees there that shield you from being discovered.
In fact it would be so difficult to find this person among them, assuming the most basic opsec, that I'm highly skeptical they actually fired anyone. I would sooner assume this is just an announcement designed to discourage the behavior, since no specifics are provided.
You are giving a lot of credit to this criminal. I really doubt they thought about this long in advance of the crime. Are you suggesting they got hired at openai so they could make calculated wagers at Kalshi? This was more likely a crime made impulsively.
First of all I'm not sure what they did is criminal. And it would have been Polymarket.
Nonetheless, you can just be a pre-existing OpenAI employee. As long as you take basic precautions, they (as in, OpenAI), are not going to be able to find out it was you.
Aged accounts, shell companies, it's a market
Not in this context it's not. Companies can't create Polymarket accounts. Polymarket accounts are just email addresses or alternatively crypto wallets. And there's no purpose I can imagine to aging them.
What investigators often look for isn't just wallet age, but funding patterns, timing, and linkages between wallets
> created a bunch of new Bitcoin accounts to hide their activity
tell me you don’t understand crypto without telling me you don’t understand crypto.
Prediction markets are interesting when they are predicting future things nobody knows for sure.
"Predicting" private, known information is the wrong use case.
77 suspicious positions across 60 wallets, 13 brand-new accounts appearing 40 hours before the browser launch. First confirmed case of a major tech company firing over prediction market trades.
I wrote about why prediction markets have a structural insider trading problem that nobody's solved yet: https://philippdubach.com/posts/the-absolute-insider-mess-of...
It's interesting that the both replies under this comment are saying exact same thing, with the exact same term ("raison d'etre"... how often do you hear two random people think of this phrase at the same time?).
It might be nothing, but it'd be funny if karma farming bots are doing some 'reply frontrunning' over the internet.
I don’t consider “raison d'etre" a suspicious phrase. It’s not something people use multiple times a day, but I’d consider it common enough that when I hear someone say it, or in this case I suppose type it, that I would give it a second thought.
I don't think that two 13 and 14 years old accounts with not that many comment per week are bots.
Archived version: https://archive.ph/XWrTA
Prediction markets exist to bypass gambling restrictions and monetize insider trading. It isn't a problem, it is their raison d'etre.
Yeah but someone has to give the money to the insider traders.
Betting and insider gambling wouldn’t work if people were educated and just didn’t gamble and so never used these platforms in the first place.
It’s an old question of whether government is responsible to protect people from themselves or should we give everyone freedom to go bankrupt in this specific way if they so desire.
I don’t know if there is a healthy way to gamble really. With drugs and substances at least there is some continuous spectrum but you either gamble your money or not.
Many, I suspect the overwhelming majority, of the markets are impossible to engage in insider trading in. So it's genuinely just an interesting way to monetize expertise. Chess is a great example. A lot of the money in that market is people turning on the latest chess engines and betting in accordance to position evals, but skilled players can see much more - like how a position that the computer gives as a dead drawn is, in reality, extremely difficult for one side to hold. So the market might give near 50% when it's perhaps more like 65/35. That's quite a large edge. There's also quite a lot of opportunities for arbitrage betting, which is by definition risk free.
>I don’t know if there is a healthy way to gamble really.
The majority of gamblers keep it within limits, only a small minority lack that control and inevitably end up impoverishing themselves.
The majority of people can’t even control their daily screen time, yet we are supposed to believe they can masterfully restrain their urges when money and dopamine are on the line? Nothing I’ve seen indicates human impulse control is that bulletproof. Furthermore, the 'I have it under control' narrative isn't proof of a healthy habit; it’s practically the universal slogan of active addiction.
Would you not say that somebody could equally cynically describe options trading in this way?
Prediction markets are very valuable because they provide information on issues that's generally much more accurate than alternative sources, such as polls. For instance Polymarket predicted 94% of the results for the 2024 election a month out, including the presidential. It can also provide more information than the news. For instance the chances of Khamenei being out as Supreme Leader of Iran by March 31st just skyrocketed up to 78%. That tells me far more than the various news sites minute by minute coverage.
Help me understand the relatively regulatory frameworks around each activity.
Jinx!
Gambling = investing. Buying stocks is also gambling. Share buybacks, dividends, fancy words for forking money from workers to some joe schmoe that bought a lottery ticket, i.e., a stock.
A stock is ownership in a business, same as ownership in a house. It is an asset that you own.
When you bet on blackjack or the superbowl, you own nothing and are simply wagering on the outcome of an event.
Gambling and equity ownership are not the same.
There's more to stock trading than just "buy and hold". Not all investing has gambling motivations but it is absolutely used as gambling tool by many
Two questions I'd have expected the article to answer:
(a) how did they identify the employee, and (b) how come they weren't sent to jail
I can't believe these markets are still legal
Why would Washington ban their staffers' bonus program?
Inside trading on the public market and on the public blockchain, that's smart!
https://archive.ph/FOet2
Bad leaders get bad followers.
We can not trust these AI corporations and organisations.
Makes you wonder how much "market accuracy" on these platforms is actually just leakage
Insider trading is so trivial on the prediction markets. I'd guess that it's actually the "feature" that results in the outcomes being so accurate.
Yup. There are good reasons why it's a problem in financial markets but NOT usually a problem in prediction markets:
https://www.economist.com/leaders/2026/02/18/why-insider-tra...
> In prediction markets, informed trading is not a crime or an injustice—it is a valuable service.
A big exception, however, is using prediction markets to make predictions on events regarding publicly traded companies.
The concept of a valuable service falls apart if players can influence the actual event. Without equal footing and basic honesty, you aren't measuring reality so much as you are subsidizing those with the power to manipulate it.
Yup. That is the other big exception described in the article.
There's a feel good story where a parent can't afford a very expensive medical procedure to save a child, so someone tells them to place a massive bet in a prediction market for a certain event that may happen, and then they make it happen, therefore siphoning off money from the other gamblers for a good cause. Just a small way everyday people use the system against itself as a way to survive.
Prediction markets have only events whose outcome is eventually publically resolved, by design. With insider trading, the trader is incentivized to release the information as late as possible, as close as possible to the events.
Why are these big insider bets being placed within hours of the event actually occurring? The insiders are doing the equivalent of bid sniping — waiting until the last possible moment to exercise.
This is how inside info works in trading markets in general. And again this is inevitable and by design.
It also makes them largely useless, because the timeline for which useful position is shared is compressed to the point where nothing useful can be gleaned from the information.
The thing is a “lie incentiviser” — a market entirely for suckers. That’s why 95% of volume is sports betting.
That’s setting aside insider positions having an influence on the outcome of events which is a whole separate problem.
> Why are these big insider bets being placed within hours of the event actually occurring?... It also makes them largely useless
They're not, usually. The more the outcome seems unlikely at first, the more you're incentivized to place your big bet earlier, when the odds seem worse, because you'll make a ton more money.
When these bets are placed only a few hours beforehand, that's often because the actual decision hasn't actually been made until then.
And there are plenty of areas where having notice of an hour or two is still hugely vulnerable.
why are publicly traded companies special? The speculation is not on securities.
You're not participating in a "market" (even though they call it that), you're purely gambling and speculating. People have been doing this since currency was a thing. Even gambling laws don't apply in my opinion. If I told you the government will publish evidence of aliens existing tomorrow, and we make a bet on it, that's not really gambling, it's not so much a game of choice as it is a competition of who can predict things better. The other person might have insider knowledge, but it's up to you to either take on that risk or assume despite that your knowledge about the topic will overcome their potential insider knowledge.
It’s literally gambling what are you talking about
Prediction markets are probably most "accurate" when at least some participants have genuinely superior information
Yes and no.
If you see prediction markets as how they were originally pitched (price ~approximating likelihood), then insider trading is good. It provides discovery.
If you look at what prediction markets are today (gambling, especially on sports, especially in states that have banned it), then insider trading is bad. Particularly when the people trading can influence the outcome (e.g. a pitcher purposefully throwing into the dirt.)
Of course. The point is not to make individual players money (that does sometimes happen as a side effect) it's to leverage their greed to find truth.
Except it's not "truth" as much as it is whatever has the most financial incentive to happen.
To some approximation, the two are the same.
Good.
I do hope corporations in general take a harder stance on this. From a society perspective people with inside knowledge fleecing randoms is not a win. We've got that somewhat under control on the stock exchange, but have this absurd situation where on prediction markets it is a free for all and everyone pretends this is fine.
I also think corporations should distance themselves from individuals willing to fleece randoms. Trading in general is very wild west survival of the fittest but active exploitation of insider knowledge speak of very poor morale character
Honestly it seems stupid but fine to me. Like if someone random comes up to me on the sidewalk and says hey if OpenAI announces a browser tomorrow, you give me $100. If not I'll give you $1000. Obviously I'm not going to take them up on it, they clearly have inside information.
If you're betting on a prediction market without insider information then you're just... The fool who is soon parted from his money one way or another.
I generally feel like people should be free to do whatever insane stuff they want with their own lives.
> I generally feel like people should be free to do whatever insane stuff they want with their own lives.
The problem with people doing insane stuff with their "own money" is the burden they often exact on their family or society.
Perhaps the realm of independence starts when loans are reasonable and current, there is sufficient child support, and they are meeting a base savings rate for their retirement.
Speaking of which, perhaps any UBI could also use a minimal criteria, reviewed annually but without any barriers on first year eligibility.
>Like if someone random comes up to me on the sidewalk and says hey if OpenAI announces
Then you hopefully understand that randoms approaching you is no equal to reality.
That’s pretty common, you may think you own the data you work on, but you don’t. It’s proprietary confidential.
Who would think that? At every corporation where I've worked it's been explicit in both the contract and in HR training that this is explicitly not allowed.
why would you think you own data you work on
> you may think you own the data you work on, but you don’t
It's called <open>AI.
EDIT: I am wrong, see children
> The employee, she said, “used confidential OpenAI information in connection with external prediction markets (e.g. Polymarket).”
Note that “insider trading” is not illegal on prediction markets. The particular issue here is that the employee “disclosed” confidential information on a public forum by influencing the prices assigned to certain outcomes by prediction markets.
I don't think this is true, though enforcement is another thing and the standard is different than in securities markets. Prediction markets are regulated by the CFTC and the insider trading standard is “misappropriation of confidential information in breach of a pre-existing duty of trust and confidence to the source of the information” (vs any “material non-public information” for securities) https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstateme...
It is most definitely against the rules of the sites and illegal, especially on kalshi
I find it absurd that someone can create an unregulated market like Kalshi, and then all of us need to be beholden to it, even though the idea is stupid. How is it possible that someone can create a product that none of us agree on, and now everyone else has to conform to the rules around it because of the problems that it creates. I would rather Kalshi get shut down than the precedent of allowing this to control employees or people.
Wouldn't those prediction markets be more efficient if positions were associated with people's real names?
Like, a 100k wager from a finance dude carries some information, but a 10k wager from a staffer says a lot more!
that's right prole! only Congress has that privilege!
Prediction market, either gambling or inside trading.