Connect with us
DAPA Banner

Crypto World

Kalshi Wins: Third Circuit Delivers Prediction Market Victory

Published

on

Today, the Third Circuit Court ruled in favor of KalshiEX LLC, after the platform sued New Jersey regulators for trying to restrict its federally regulated prediction market operations.

The decision, handed down on April 6, 2026, reinforces the legitimacy of prediction markets and delivers a major boost to the industry.

The Kalshi Case Explained

Back in September 2025, Kalshi brought the case against Mary Jo Flaherty, a New Jersey state regulator, after facing restrictions on its operations at the state level.

Kalshi argued that it is already regulated at the federal level by the Commodity Futures Trading Commission (CFTC). 

Advertisement

As a result, it claimed individual states should not have the authority to block or limit its services.

In response, state regulators maintained that prediction markets — particularly those tied to elections — could fall under state laws, including gambling-related restrictions.

This legal clash set up a broader question: whether federally regulated prediction markets can operate freely across the US, or if states can impose their own rules.

Today, the Third Circuit’s decision ultimately sided with Kalshi. It strengthens the argument that federal oversight takes priority in this space.

Advertisement

Fun Fact: Prediction markets have historically outperformed polls in forecasting election outcomes. Studies show they aggregate information more efficiently than traditional polling methods!

Why Prediction Markets Matter

Prediction markets allow users to trade contracts based on the outcome of future events, from elections to economic indicators. Unlike traditional betting, these markets are designed to aggregate information and reward accurate forecasting.

Proponents argue that prediction markets offer several advantages over conventional information sources:

Advertisement
  • Transparency: Prices reflect real-time collective expectations, visible to everyone.
  • Accuracy: Participants have financial incentives to be correct, not just persuasive.
  • Fairness: Anyone can participate and benefit from accurate predictions.

Critics, however, have raised concerns about potential manipulation and the blurring of lines between financial markets and gambling. Regulatory agencies have taken different positions on where prediction markets should fit within existing legal frameworks.

What the Kalshi Ruling Means

The Third Circuit’s decision reinforces that prediction markets can operate within constitutional boundaries. For Kalshi, this means continued legal footing to expand its platform and offerings.

For the broader industry, the ruling sends a signal that courts are willing to recognize prediction markets as legitimate financial instruments rather than gambling operations.

Millions of users who rely on prediction markets for information and hedging now have greater certainty about the legal status of these platforms. As a result, the decision could accelerate institutional adoption and innovation in the space.

The prediction market industry just got its strongest legal endorsement yet.

Advertisement

The post Kalshi Wins: Third Circuit Delivers Prediction Market Victory appeared first on BeInCrypto.

Source link

Advertisement
Continue Reading
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Crypto World

Every 5 Minutes: Korea’s New Rule for Crypto Exchanges

Published

on

South Korea’s financial regulator has ordered all crypto exchanges to verify user asset balances every five minutes, following a massive overpayment incident that shook market confidence earlier this year.

One botched reward payout exposed systemic cracks across the entire industry.

What Triggered the Rules

In February, Bithumb accidentally sent 2,000 BTC per person instead of 2,000 Korean won ($1.40) during a promotional event. The error amounted to roughly $42 billion in misallocated crypto. The Financial Services Commission (FSC) launched emergency inspections across all five major Korean exchanges immediately after. What they found went far beyond a single human mistake.

Most exchanges were only reconciling their books once every 24 hours. Three had no automatic kill switch to halt trading when discrepancies appeared. Four lacked multi-step approval systems for high-risk manual transactions. Two exchanges hadn’t even separated their general accounts from high-risk transaction accounts — a basic safeguard.

Advertisement

What Exchanges Must Now Do

The FSC announced a three-pillar reform package on April 6. Exchanges must run automated balance checks every five minutes, with alerts and automatic trading halts triggered by major mismatches. Monthly external audits replace the previous quarterly schedule, and public disclosures must now include asset-by-asset blockchain holdings rather than a simple coverage ratio.

For manual, high-risk transactions such as event payouts, exchanges must use separate accounts, deploy validity-check systems that automatically reject mismatched inputs, and require cross-verification by a third party before execution.

The FSC will also require exchanges to appoint dedicated risk management officers and establish risk management committees — standards already expected of traditional financial firms. Compliance checks move from annual to twice-yearly, with results reported to regulators.

DAXA, the industry body, will complete self-regulatory amendments this month, with systems built out by May. Key provisions will feed into Korea’s forthcoming second-phase Digital Asset Act.

Advertisement

The post Every 5 Minutes: Korea’s New Rule for Crypto Exchanges appeared first on BeInCrypto.

Source link

Continue Reading

Crypto World

Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

Published

on

Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

Chaos Labs has parted ways with the Aave ecosystem after serving as the crypto lending protocol’s main risk service provider for three years, citing a budget dispute and disagreements over how Aave should manage risk.

“This decision was not made in haste,” Chaos Labs founder Omer Goldberg said in a post to X on Monday. “We worked in good faith with DAO contributors. Aave Labs was professional and supported increasing our budget to $5m to retain us. However, we are leaving because the engagement no longer reflects how we believe risk should be managed.”

Source: Omer Goldberg

Aave Labs CEO Stani Kulechov said that Chaos didn’t depart on bad terms, but claimed that Chaos pitched a proposal seeking to become the sole risk provider and thus force out other partners — a compromise Aave wasn’t willing to accept.

Chaos played a key role in Aave’s back-end infrastructure, from pricing loans and managing risk in the Aave V2 and V3 markets since November 2022, during which Aave’s total value locked rose fivefold to $26 billion.

Risk has been a major talking point in the Aave community after a user lost $50 million in a trade while interacting with Aave’s interface on March 12. The following week, Aave said it would introduce an “Aave Shield” protection feature to deter users from high-risk trades.

Advertisement

As for Chaos’ departure, Goldberg said there became an increasing misalignment over how the parties thought risk should be managed. He noted that some Aave contributors had left, raising its workload, while also arguing that Aave V4’s expanded functionality introduced additional operational and legal risks that fell on Chaos’ shoulders.

“While Aave Labs is optimistic about a swift migration to V4, history suggests these transitions take months and even years,” Goldberg said. “Until V4 fully absorbs V3’s markets and liquidity, both systems need to be operated and managed simultaneously. The workload during the transition doesn’t halve. It doubles.”

Weighing the risk of a protocol failure, Goldberg said, “There is no regulatory framework, no safe harbor, and no settled law that answers the question of what a risk manager or curator owes when a protocol fails. If things work, the work is invisible. If things break, the blame is not.”

As such, “We are walking away from a $5 million engagement,” Goldberg said.

Advertisement

Chaos wanted Aave to boot LlamaRisk, Chainlink: Kulechov

Aave Labs CEO Stani Kulechov told a slightly different story, stating that Chaos wanted to be the sole risk manager and use its price oracles instead of Chainlink’s.

Following that request would have forced Aave to push out its other risk protocol partner, LlamaRisk, and thus abandon its two-layer economic risk model.

Related: DeFi lender Aave launches on OKX’s Ethereum L2, X Layer

Kulechov added Aave was unwilling to integrate Chaos-built price oracles, citing Aave’s “track record” with Chainlink’s services, which its “users are currently more comfortable with at scale.”

Advertisement

He also said Chaos was already “exploring winding down its risk consultancy services,” and that Aave had offered to double its payment to $5 million to retain them.

Cointelegraph reached out to Chaos Labs for comment.

Kulechov noted that Chaos’ departure hasn’t disrupted the Aave protocol, its smart contracts, token listings or network integrations.

Moving forward, Aave said it “will work closely with LlamaRisk to ensure a smooth transition” and maintain its two-layer economic risk model. 

Advertisement
Source: LlamaRisk

Chaos’ departure comes amid a protocol-wide feud over how much funding and revenue control Aave Labs should receive versus Aave’s decentralized autonomous organization.

Despite the internal issues, Aave crossed the $1 trillion mark in cumulative lending volume in late February, marking a first in the DeFi industry.

Magazine: Animoca teams up with Ava Labs, Shrapnel on Steam: Web3 Gamer