Key facts
- Spotify has asked Kalshi and Polymarket to remove its logo and clarify they have no partnership.
- The request follows Spotify's identification and removal of over 500,000 artificial streams.
- These artificial streams were used to manipulate music rankings and settle a prediction market on Kalshi.
- A top Kalshi trader criticized the platform for settling the market based on fraudulent results.
- Polymarket is reportedly under CFTC investigation for allegedly paying creators to generate fake bets.
Spotify has formally requested that prediction markets Kalshi and Polymarket remove its logo from their platforms, citing concerns over market manipulation tied to artificial streaming activity. The music streaming giant identified and removed over 500,000 fake streams that had artificially boosted the popularity of Malcolm Todd's song "Earrings," which was subsequently used to settle a prediction market on Kalshi.
A top trader on Kalshi, Caleb Davies, publicly criticized the platform for settling the market based on these fraudulent results, despite his warnings. Davies alleged that Kalshi was aware of the manipulation but continued to offer liquidity rewards, thereby incentivizing fraudulent activity to collect fees.
This situation unfolds amid broader regulatory scrutiny of prediction markets. Polymarket, another major platform, is reportedly under investigation by the CFTC for allegedly paying online creators to generate fake bets and winnings. State regulators also view these platforms as unlicensed sports betting operations, leading to ongoing legal disputes with the CFTC over jurisdiction.
In response to these concerns, the CFTC is proposing new rules aimed at curbing insider trading and market manipulation within prediction markets. The regulator has opened a comment period for these proposed rules, with a deadline of July 31.