Crypto.com Hires Internal Market Maker for Predictions – Is the Exchange Trading Against Users?

Core Insights - Crypto.com is expanding into prediction markets by establishing an internal market-making desk, which raises concerns about potential conflicts of interest as the exchange may trade against its own users [1][2][4] Group 1: Company Developments - The Singapore-based cryptocurrency exchange is actively recruiting a quantitative trader to manage financial contracts related to sporting events on its prediction market platform [1] - The new market-making role will involve trading against customer orders to enhance liquidity for sports contracts and other derivatives on the U.S. platform [2] Group 2: Industry Context - Prediction markets allow users to trade contracts based on real-world outcomes, with prices reflecting the market's implied probabilities, but the introduction of in-house market makers has sparked debate over neutrality [3] - The practice of market making is contentious, especially for exchanges under U.S. federal oversight, as it can resemble traditional sportsbooks that profit from customer losses [4] Group 3: Responses and Clarifications - A spokesperson from Crypto.com stated that the company does not depend on proprietary trading for revenue and aims to provide customer access to digital assets and event contracts for a fee while maintaining a risk-neutral stance [6] - The internal market maker at Crypto.com does not have preferential access to customer order flow or proprietary data and operates under regulations disclosed to the Commodity Futures Trading Commission [7]