With the rise of prediction markets, Polymarket, Kalshi, and Coinbase have all begun building their own market-making capabilities to seize control of liquidity and pricing. Crypto.com has also announced the recruitment of quantitative traders in the United States to be responsible for internal market making of sports event contracts, sparking discussions and questions about whether it is "betting against clients" or venturing into the regulatory gray area of information asymmetry.
Crypto.com joins internal market-making competition: recruiting quantitative traders to oversee market making for sports contracts.
The prediction market has experienced explosive growth in recent years, and in order to accelerate matching efficiency and provide more stable trading depth, various platforms have turned to a market structure dominated by their own or external professional market makers.
Crypto.com recently posted a job opening in the US for a quantitative trader with a starting salary of $120,000 to handle internal market making for sports event contracts. This role requires continuous price adjustments, risk management, and price updates based on the latest information during the event.
Previously, competitors such as Polymarket and Kalshi were also seeking to establish an internal market-making team.
External doubts have arisen regarding whether the operation of the casino and its role as a bookmaker involve internal market manipulation, which could be interpreted as gambling against users.
However, when an exchange simultaneously acts as a "market platform" and a "market maker," a conflict of interest may arise. The biggest concerns include:
Can internal market makers see customer orders in advance (first look)?
Can we acquire proprietary information to create an information asymmetry advantage?
Will it become a revenue stream for the platform to "bet against its customers"?
These questions quickly intensified after Crypto.com's recruitment was exposed, and given the strong association between sports events and the betting market, it is likely to increase the sensitivity of regulatory authorities.
Crypto.com responded: It has disclosed to the CFTC that it does not rely on revenue from proprietary trading.
In response to market concerns, Crypto.com clarified: "The company does not rely on proprietary trading as a source of revenue, and we maintain a risk-neutral stance."
The internal market-making team has fully reported to the CFTC and follows the same rules as external market makers. They do not have access to customer order information, and no market maker has "priority viewing rights".
Crypto.com emphasizes that its internal market-making is solely for the purpose of improving liquidity and enhancing user experience, rather than profiting from informational advantages.
I heard a similar story two years ago when Crypto.comwas exposed for running proprietary trading for years and for requiring employees not to disclose the existence of internal market makers, claiming it was to optimize spreads and efficiency on the platform.
A rift exists between the state government and the CFTC, and sports prediction contracts still cross regulatory red lines.
Although platforms such as Crypto.com and Kalshi have obtained CFTC approval for event contracts, the regulatory landscape still exhibits inconsistencies between federal and local standards.
Last week, Connecticut ordered Crypto.com, Kalshi, and Robinhood to stop offering contracts for sports events, deeming them unauthorized sports betting, highlighting the legal conflicts and gray areas surrounding prediction markets.
In other words, even if an exchange's internal market-making activities are approved by the CFTC, the product itself may still be considered illegal in a particular state, as is the case recently faced by Kalshi.
Internal market manipulation is becoming a trend, but the regulatory storm is just beginning.
Crypto.com, Polymarket, and Kalshi have joined hands to embark on the path of "own market makers," indicating that the prediction market is moving towards a more mature market structure and infrastructure.
However, event contracts still operate on the fringes of US regulation, with varying enforcement standards across states, meaning that any platform's expansion could potentially incur legal risks.
This article, "Crypto.com Follows the Trend of Recruiting an Internal Market-Making Team, Responding to Regulatory Risks: Will Not Go Against Users," first appeared on ABMedia, a ABMedia .
