I am the PI of a laboratory. I buy up the market and (falsely) announce that I succeeded in replication. Sell and make profit. Then a couple of days later I announce that I made a terrible mistake.
How do you prevent this scenario? I did nothing illegal, I just "not noticed the mistake I made".
OP is downplaying the shenanigans that can go on here.
The only way to prevent it is some sort of SEC insider trading or market manipulation laws.
Why do think it’s such a problem? Those are the risks of speculating and the market adjusted back downwards in very short order. If Iris was a manipulator the gains were minimal and fleeting.
The anti-markets comments all over this are so unfortunate and misguided.
By your own logic don’t you just prove that a real lab is now potentially motivated to investigate and even replicate? If I’m working in a lab and it looks like it is working, why not let me place money on yes and speculate? I have excellent information.
Edit: Understand that the scammer has to buy, then release the false information, and then sell. They only “scam” the buyers that don’t critically assess this new information, such as it’s provenance and quality. This means that over time only the best analysts survive and thrive. Smart speculators likely sold the spike, limiting the number of buyers the manipulator could find. This scenario is actually an argument FOR prediction markets.
Yes correct that is a scam, no scare quotes. A scam doesn't become less of scam because it worked or didn't work.
The issues are not problems as people make them out to be, you don’t have an intrinsic right to not be scammed, or to take vacations, as nice as it sounds, those are just fantasy that leads to worse situations when attempting to make reality.
And the lesson is that betting markets are a scam.
But then you get people criticizing the ones telling you that lesson. Is it because newborn fools must be preserved until people can take their money?
The existence of the market is encouraging literal scams.
Somehow you expect people to act differently if that market wasn't there. Personally, I doubt a large number of those interested even know the market exists.
Yet, scammers are deeply aware of betting markets. they seem to always be there, and even create new ones just so they can play.
In regular markets you can't just say "we increased our sales 1000%" and a week later "oops, sorry, misplaced decimal dot". You can do that in prediction markets.
I don’t understand what you think is different with other markets. Information must be assessed for it’s accuracy and acted on by participants.
In this case I’d even argue the prediction market helped focus attention and resulted in rapid counter analysis that questioned the claims.
Perhaps without the LK-99 markets effects the false information would have had wider and longer reach? The losses of the unskilled participants are a perfectly acceptable cost and in fact beneficial in the long term.
The history of financial markets is rich in examples.
Or more recently, the endless supply of scamming in sports betting where athletes collude to fix games.
Insider trading has a very specific definition, which does not apply here. In fact there are huge financial markets, like forex, where insider trading mostly doesn't apply.