Are Sequoia Partner Shaun Maguire’s Mental Health Episodes Just Fraud?

How can one promote a federally-regulated exchange while spreading conspiracy theories about derivatives traded on the exchange?

Are Sequoia Partner Shaun Maguire’s Mental Health Episodes Just Fraud?
Conspiracy theorist, election results denier, and Sequoia Partner Shaun Maguire.

On October 2, 2024, Sequoia-backed exchange KalshiEx (Kalshi) resumed taking bets on the outcome of 2024 congressional elections after a federal appeals court in Washington, D.C., lifted a freeze on such contracts.

By October 3, 2024 Kalshi opened betting on the results of the presidential election.

It took all of about 48–72 hours for Sequoia partner Shaun Maguire to start vehemently posting on X conspiracy theories calling into question election results, while simultaneously promoting Sequoia investment Kalshi for betting on said election results.

This begs the question: are Sequoia partner Shaun Maguire’s actions fraudulent? Does claiming that US elections are fraudulent while simultaneously promoting the use of Sequoia investment Kalshi to bet on the outcomes of these elections not, at a bare minimum, constitute potential FTC-enforced false or deceptive advertising? After all, if something is clearly presented as fraudulent and the consumer’s money is taken anyway, is that product/service/investment not fraudulent?

Is it not wire fraud to use the internet to spread false claims about risks and investment opportunities to consumers and investors? If Sequoia partner Shaun Maguire does in fact have ample evidence of widespread blank ballots getting delivered to specific residences and he’s simultaneously promoting Kalshi, this would seemingly be a significant undisclosed risk. If Sequoia partner Shaun Maguire is simply making stuff up on X about ballots and questioning election results fidelity while promoting Kalshi as an opportunity for trading federally regulated financial products around election results, that seems to be clear wire fraud.

Further, is this not securities fraud? Almost anything can be argued as securities fraud. Kalshi has stock available to private investors. Sequoia is an investor in Kalshi along with other shareholders.

Kalshi is a federally-regulated financial exchange, as Kalshi notes on its website and in its materials. The bets you place on Kalshi are regulated financial derivatives.

From Kalshi’s new user onboarding flow, captured October 8, 2024.
“How is Kalshi Regulated?” blog post from Kalshi’s website. https://kalshi.com/blog/article/how-is-kalshi-regulated.

Under the Commodity Futures Trading Commission (CTFC) Whistleblower Alert for Corrupt Practices, misconduct can include:

via https://www.whistleblower.gov/whistleblower-alerts/Corrupt_Practices_WBO_Alert_April_30_2021.htm
  • Corrupt practices that impact the prices in commodity markets that drive U.S. derivatives prices or that are used to manipulate benchmarks, such as those that serve as the basis for related derivatives contracts
  • Corrupt payments used to secure business in connection with regulated activities like trading, advising, or dealing in swaps or derivatives, paid out of funds investors believed were being used to invest
  • Corrupt practices used to misappropriate material nonpublic information that traders would want to know

Gee, it sure seems Sequoia partner Shaun Maguire is misappropriating material nonpublic information about these alleged loose ballots. This materially impacts the price and value of the derivative contracts which traders (participants of Kalshi) would want to know.

False claims about Kalshi being the ‘most accurate’ way to forecast an election

The scam is very easy to see, in case this is still unclear.

Step 1) A federal appeals court upholds your ability to operate as an exchange offering derivatives on elections.

Step 1. October 2, 2024. via Reuters https://www.reuters.com/legal/us-federal-court-upholds-ruling-letting-kalshiex-list-election-betting-contracts-2024-10-02/

Step 2) Your investor at Sequoia Shaun Maguire posts incessantly about election results fidelity, Antifa, loose ballots flying around, and this attracts an audience.

Step 2. October 4-5, 2024.

Step 3) The audience begins putting in bets in support of what Shaun Maguire is talking about, in this case in support of Trump and right-wing outcomes.

Step 3. October 7, 2024 afternoon.

Step 4) As the bets begin skewing toward Trump and right-wing positive outcomes, you claim that Kalshi is better than polls. You then release data showing that Trump is now ahead on the exchange.

Step 5) You start appearing on financial media, again reiterating this false claim that your prediction market is the best way to gauge the current standing of the presidential election, as Kalshi CEO Tarek Mansour did this morning, October 8, 2024, on Schwab Network.

Trump vs Kamala: Real-Time Election Odds | Morning Trade Live| Schwab Network
Tarek Mansour, CEO of Kalshi, discusses his company's latest court victory allowing it to restart…

Readers may note that at 3:45 into this video Kalshi CEO Tarek Mansour claims these prediction markets are the “most accurate” way to predict elections.

This is, of course, ridiculous and misleading. Marketing an exchange to investors as “most accurate” when the past week has been filled with your Sequoia partner Shaun Maguire rallying election conspiracy theorists in fact probably makes Kalshi one of the “least accurate” ways of forecasting.

As of 3:55PM US Eastern today, October 8, 2024, there is barely any volume at all on the presidential race on Kalshi.

Screengrab from Kalshi.com.

It’s Not Like Sequoia Has Ever Invested in Fraudulent Exchanges Before

Oh wait, that’s not right, they have absolutely done this.

Sequoia-backed Sam Bankman-Fried off to jail. Photo via POLITICO.

If you’re thinking about participating in Kalshi or any similar exchange it’s important to consider whether or not you’ll actually even be paid out.

Do you think even if your bet hits that Kalshi is going to pay out in a timely manner? Why would you think they would pay you out if Kalshi’s financial backers are already trying to discredit the underlying contracts of the derivatives on which you are betting? Are you nuts?

If Kalshi’s financial backers want to drag out and provoke election fraud cases and they have the resources to drag out litigation as long as possible (they do), you’re tying your money in with the wrong people, even if your bet is right. This is a risk I believe most don’t appreciate.

Shaun Maguire’s day is coming. He’s been a very, very bad boy.

Caveat emptor.