Saturday, April 6, 2013

InTrade Has $700,000 Cash Shortfall

InTrade, which was famous for its offshore betting on election outcomes and other developing events and which shut itself down after reporting accountants found irregularities in the books is now reporting it has a cash shortfall of $700,000. The exchange appears to be attempting to raise funds necessary to reopen. However, it is unclear if the exchange will be successful in raising the necessary funds, failure to do so would mean liquidation by the exchange and certain losses for account holders. Below is the statement they have posted at their web site:
April 5, 2013

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 when comparing all cash on hand in Company and Member bank accounts with Member account balances on the Exchange system.

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.

Since March 10, 2013, the Company has been operating with new funds invested by current shareholders.
We are now very confident about the reasons which caused the current circumstance of the Company; however, for legal reasons we are not yet at liberty to document them to you. I can confirm that the Company, if it is able, intends to vigorously pursue two substantial monetary claims against two distinct parties for an aggregate amount greater than $3,500,000.
Because of these circumstances, the Company has now contacted all members with account balances greater than $1000, and proposed a “forbearance” arrangement between these members and the Company, which if sufficient members agree, would allow the Company to remain solvent.

The successful recovery in the future of even part of our intended legal claims, ought to allow the Company to provide full restitution to Members. We would also hope at that time, that the Company would be in a position to resume commercial operations. For now, we are in active discussions with current shareholders and possible new investors as we seek further investment in the Company to strengthen our financial position.

Please note that while we will try our very best to ultimately return 100% of Members’ settled account balances, we can make no promise or assurance that we will be able to do so. It is possible that, even though we gain a sufficient number of Members to agree to provide forbearance to the Company, the Company may go into liquidation in the future.

By Tuesday, April 16, 2013, we expect to be able to inform our members if sufficient forbearance has been achieved. If so, we will then resume limited operations of the Company and we will be able to process requests for withdrawals as agreed. If sufficient forbearance has not been achieved, it seems extremely likely that the Company will be forced into liquidation.
I am truly grateful for your personal expressions of support and your patience as we try to deal with this unfortunate circumstance. I appreciate the feedback provided, and I intend to exceed your expectations as we try to correct this situation. I hope that you decide to stand by our side in the effort to preserve the Company and in our efforts to pursue the complete restitution of all of your funds.

Ronald Bernstein
Director, Intrade

1 comment:

  1. Shame if it goes. I was able win decent sized bets against acquaintances in last presidential election based on their contracts.