Prediction-Market Surge Lifts Demand for Solidus Labs’ Surveillance Tools

As prediction markets gain traction among retail traders and institutional investors, a new layer of financial infrastructure is emerging to address a familiar concern: market integrity.

Solidus Labs, a firm specializing in trade surveillance and compliance, is expanding beyond its cryptocurrency roots to meet rising demand for monitoring tools in newer, event-driven markets. The shift reflects broader changes across Wall Street, where alternative trading formats are testing the limits of traditional regulatory frameworks.

“If you're trading on any financial product in any financial market, we are making sure that you are safe doing so,” said Asaf Meir, the company’s co-founder and chief executive, in an interview with AInvest’s Capital & Power. He added that the firm’s role is to ensure “there is no market manipulation, market abuse, insider trading of any form.”

Prediction markets, platforms where users trade contracts tied to real-world outcomes such as elections, economic indicators, or corporate events, have drawn increasing attention in recent years. Reuters and Bloomberg News have reported on the growing regulatory scrutiny surrounding these platforms, particularly in the U.S., where questions remain over whether such contracts should be treated as financial instruments or as forms of betting.

That distinction has placed companies like Kalshi, a federally regulated exchange, at the center of legal and policy debates. At the same time, it has created demand for more sophisticated surveillance systems capable of detecting misconduct in markets that differ fundamentally from equities or derivatives trading.

Solidus Labs, founded by former Goldman Sachs employees, initially built its technology to navigate the fragmented and always-on nature of crypto markets. Meir said those early challenges forced the company to rethink how market abuse is identified. “We were born in crypto, solving for the high fragmentation degree that exists in crypto,” he said, noting that the firm’s “frontier technology… has translated really well” to other asset classes.

In prediction markets, the task is even more complex. Unlike traditional markets that rely heavily on price and volume signals from a single order book, these platforms often require integrating disparate data sources, including public information, sentiment indicators, and online activity, to identify suspicious behavior.

“To understand insider trading and market abuse on prediction markets, you need to bring together multiple otherwise very siloed data streams,” Meir said.

He pointed to the broader “attack surface” in such markets, where nonpublic information may be distributed across a wide network of individuals. For example, contracts tied to corporate advertising decisions or political developments may involve hundreds of participants with varying degrees of access to relevant information. That diffusion complicates efforts to detect asymmetries that might signal insider activity.

Regulators have long required exchanges and broker-dealers to maintain systems that monitor for such risks. But as newer trading venues seek to attract institutional capital, surveillance capabilities are increasingly viewed as a competitive differentiator rather than just a compliance obligation.

“If you're a market operator and you're looking to usher in significant institutional adoption, the first thing they ask… is what do you do to make sure there's good market safety… and guardrails,” Meir said.

Kalshi, for instance, already operated a surveillance framework before working with Solidus Labs, according to Meir, but sought to enhance its capabilities as it expanded. “They wanted to keep pushing the envelope… which is why they partner up with us,” he said.

The company’s expansion comes amid what Meir described as a broader transformation in financial markets, driven by increased retail participation, technological innovation, and the emergence of new asset classes. “In five to 10 years, there's going to be a different market structure that's much more fragmented,” he said, adding that Solidus aims to build “a generational compliance operating system” for that future.

As prediction markets continue to evolve, and as regulators weigh how to classify and oversee them, the need for tools that can monitor complex, real-time trading environments is likely to grow. For firms like Solidus Labs, the opportunity lies not only in keeping pace with that change, but in shaping the guardrails that define it.