DUBLIN (Reuters) - Irish online betting exchange Intrade, which let customers stake cash on everything from the Papal conclave to the date of the next major terror attack, said it had ceased trading after the discovery of possible financial irregularities.
Intrade, whose users bought or sold shares representing the likelihood of an event occurring, said it had closed and credited all open bets as of the end of business on Sunday to customer accounts.
But members’ accounts would be frozen until the company concluded an investigation in the coming weeks, it added.
Intrade’s auditors last month expressed concern over payments made to founder John Delaney - who died in 2011 in an attempt to reach the summit of Mount Everest - and other third parties.
In November, the company said it would no longer accept U.S. customers because of what it called legal and regulatory pressures, after which trading volumes on the site dropped sharply.
“Due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com,” the company said in a statement on its website on Monday.
“These circumstances ... may include financial irregularities.”
Intrade’s suspension follows the collapse of financial spread-betting company WorldSpreads Group last year after its directors found a shortfall of around 13 million pounds ($19.4 million) of client money.
Intrade, which was founded in 1999 and according to a staff member employed fewer than half a dozen people at its Dublin headquarters, gave no details of the irregularities and said it had acted in accordance with Irish law.
The firm’s operations manager Carl Wolfenden declined to comment further.
In its independent report on the company’s 2011 accounts, Intrade’s auditor, Dublin-based Caulfield Dunne Accountants, said the company’s directors were aware of significant financial irregularities in internal accounts from prior years.
It said the firm had “insufficient documentation regarding payments made into bank accounts in the name of a deceased former director and other third parties.”
Intrade had just two directors in place at the end of last year, according to the accounts, after three others retired and Delaney died.
The current directors, appointed last year, were not in a position to comment on the maintenance of the records, the auditors added in the report filed last month with regulators.
Ireland’s Office of the Director of Corporate Enforcement, which would be responsible for investigating fraud at the company, declined immediate comment, as did the Department of Justice, which regulates gambling in Ireland.
Intrade, which also offered odds on future financial data such as the level of the Dow Jones share index in 2013 and the likelihood of a U.S. recession before the end of the year, held members’ funds of $5.7 million at the end of 2011.
But activity on the site fell sharply from last November, when it dropped its U.S. business after the country’s commodities regulator sued the exchange’s owner for allowing unauthorized trading by U.S. customers.
Just over 50,000 unique trades had been made so far this year compared to over one million during the whole of 2012, data presented on the company’s website said.
A spokesman for the U.S. Commodity Futures Trading Commission (CFTC) said on Monday that it was not aware that there were any other probes into Intrade’s business.
Additional reporting by Maggie Lu Yueyang in Syndey and Douwe Miedema in Washington; Editing by John Stonestreet