Crypto.com has entered the center of a new controversy by launching a trading app prediction markets which allows margin trading — practice that, in essence, amounts to gamble with borrowed money. The initiative dangerously brings the platform model closer to the old scheme of informal scorer or offshore houses that operate without strict responsible gaming rules.
The news comes through the application O.G.presented by the company as “a new prediction market experience”. According to Crypto.com itself, this is the first platform in the industry to offer leveraged trading in this type of market.
What is margin trading — in simple terms
Margin trading means trading using creditthat is, betting or “investing” with money that is not yours. In the world of sports betting, this is the direct equivalent of bet on credit.
Before betting regulation in the United States, this was the standard model: the bettor would call the local bookmaker, place the bet without a deposit, and if they lost — which statistically happens in the long run — they would owe money.
It is precisely to avoid this type of situation that Regulated bookmakers are prohibited from offering credit to customersone of the basic pillars of responsible gaming policies.
Why Crypto.com can do this
Crypto.com operates OG as a event contracts market regulated by the CFTC (U.S. Commodity Futures Trading Commission), not like a traditional sportsbook.
This makes the company is not subject to the same restrictions imposed on betting operators, which includes the prohibition of credit to bettors. It is exactly this regulatory gap that is generating strong concern in the sector.
Risks of leveraged trading
Margin trading was once responsible for billions of dollars in losses in the traditional financial market and in the crypto market. In highly volatile assets like cryptocurrencies, leverage turns ordinary swings into devastating losses.
Apply this model to sporting events — which already involve risk by nature — further increases the potential for harm to the common user.
For industry critics, allowing leverage in prediction markets is another step in deliberate confusion between investment and gamblingsomething regulators have been trying to avoid for years.
Promotions that resemble bookmakers
In the launch statement, Crypto.com also announced that The first million OG users can receive up to $500 in rewards. The strategy clearly recalls the welcome bonus used by sports betting houses.
Furthermore, the company signals incentives aimed at high-volume users, another common practice in the betting market — and one that tends to increase the risk of problematic behavior.
Lack of regulatory “guardrails” worries
In her farewell speech as CFTC commissioner, Kristin Johnson warned of the growing risk of prediction markets operating without adequate protections:
“We have very few protective barriers and little visibility in this market. When these contracts start to be offered with margin and leverage to retail investors, the need for clear rules becomes urgent.”
Your successor, Mike Seligadopted a much more permissive tone. Although he did not directly address leverage, he made it clear that, under his management, the prediction markets linked to sporting events will continue with broad regulatory freedom.
In the same week, the CFTC officially announced the withdrawal of a 2024 proposal which would prohibit contracts for sporting, political or military events in these markets.
Crypto.com treats betting as an “investment”
Without trying to disguise it, Crypto.com positions OG as a platform where users can “trade” sports as if they were financial assets.
In the official statement itself, the company states that the application combines:
- accessibility of consumer apps
- social media engagement
- rigor of institutional platforms
All this to offer contracts for sporting, political, financial and cultural events.
In practice, when opening the app, the user is immediately exposed to sports markets, such as “The Big Game”with lines, handicaps and bets on players presented in a very similar way to traditional bookmakers.
There are bets on spreads and MVP to curious props, such as:
- heads or tails coin
- halftime music
- National anthem
- Gatorade bath
Fine line between betting and investment
Despite the financial discourse, the functioning of the OG increasingly resembles that of a sports betting house operating outside the traditional regulatory framework.
By enabling betting with borrowed money, Crypto.com reignites a critical debate in the United States: To what extent are prediction markets being used to circumvent rules created precisely to protect consumers?
Attention: This product from Crypto.com not available for Brazilians
It is important to clarify a central point for the Brazilian reader: the prediction market O.G.launched by Crypto.com, is not part of the offer available in Brazil.
This product was created exclusively for the United States and operates through Crypto.com | Derivatives North Americaan entity registered and supervised by CFTC (Commodity Futures Trading Commission) — the US derivatives regulator.
Therefore, when accessing the Crypto.com website or application from Brazil, the user does not find this type of marketneither sports contracts nor leveraged trading linked to events. The Brazilian version of the platform only offers services permitted by local regulation, such as buying, selling and custody of crypto assets.
🇧🇷 Can Brazilians access this market?
In practice, no.
- The OG product is blocked by jurisdiction
- Demands identity verification compliant with US rules
- It is linked to a US regulated entity, not Crypto.com’s global or Brazilian operation
I.e: is not a feature legally available to Brazilian usersnor something that is “hidden” in the national app.
Why does this model raise concerns?
Even though it is legal in the USA, the format raises important warnings.
The OG allows leveraged trading in prediction marketswhich, in practice, means take positions with borrowed money about sporting, political or cultural events. This type of structure brings the product much closer to credit betting than a traditional investment.
In volatile markets — especially when combined with leverage — the risk of rapid and significant losses increases considerably. That’s why, this type of operation is prohibited in regulated betting houses nor is it part of the responsible gaming guidelines adopted in regulated markets.
The central point
Although Crypto.com presents OG as a tool for “retail investors”, the product mixes financial language with typical betting mechanicswhich can create confusion and encourage risky behavior — especially for less experienced users.
Fonte: Gaming365 – Brasil
