Intrade CEO John Delaney climbing Mount Everest on May 4, 2011
Photo: Chris Cannizzaro, digitally edited by Fortune
By Brian O'Keefe
October 10, 2013

Where does a man go to test himself, perhaps to cleanse himself? No ordinary soul, this man. He lives to demolish his limitations, to push himself to extremes. Run a marathon? Why not try two in the same day? To those around him, he’s kind, courtly, honorable — a gentleman. He is also pigheadedly stubborn. An autocrat in the office. Intensely private. And maybe, by this point, a bit worn down by the struggle. Frustrated by his ailing body. Wondering if he’ll ever figure out the right formula for his business. In need of a big win. Where else could John Delaney go but to the highest point on earth?

They decided to try for the summit at night. The Russian-led expedition of eight climbers, eight Sherpas, and two guides reached the final camp on the north slope of Mount Everest around 2 p.m. on May 20, 2011. It was a Friday. At an altitude of 27,000 feet above sea level, the group was already more than 1,000 feet into the death zone, the extreme altitude at which oxygen levels drop to one-third of normal and aren’t enough to sustain human life for more than a short time. But the mood among the climbers was one of muted excitement. The team had spent nearly six weeks waiting and preparing — climbing from base camp to higher points and back, shocking their bodies to acclimate to the altitude. Now the weather was clear.

If they waited until morning for the final ascent, the route up would be crowded with other climbers. A traffic jam on the way could keep them from reaching the top. There was only one choice. They would rest for a short while, make their final preparations, and set out at 7 p.m. They would climb in darkness. If all went according to plan, the climbers would reach the summit in the predawn hours.

John Delaney was one of the more experienced mountaineers in the group. He was also, certainly, the only one who had been a regular presence on CNBC. Delaney, the CEO of Intrade, a Dublin-based company known for operating uncannily accurate “prediction markets” that allowed customers to place bets on the outcome of presidential elections and other geopolitical events, had previously summited several of the world’s highest peaks. Five years earlier he had come to Everest and climbed to the North Col, at 23,000 feet, but hadn’t attempted the summit. In the weeks since the expedition team had arrived in Kathmandu and begun preparing to climb the Tibetan side of Everest, Delaney had proved himself as one of the group’s strongest climbers.

But there were plenty of reasons for him not to be there. To begin with, he hadn’t bothered to inform the shareholders of his privately held company that he would be spending two months on a mountain in Asia on a potentially deadly climb. Dean LeBaron, the founder of mutual fund firm Batterymarch Financial Management and one of Intrade’s major investors, had no idea that Delaney was on Everest. “I know exactly what I would have said,” says LeBaron. “I’d have said, ‘Listen, entrepreneurs don’t have a life of their own. You know, you’re captive of the company until such time as it can exist well without you.'”

Delaney, who was 42, had other factors weighing on him as well. He was the father of two young sons. And his wife, Orla, was expecting their third child, a girl, in a matter of weeks. In fact, Delaney didn’t know it, but the baby had already been born prematurely two days before he began the climb to the summit. She would be named Hope. His family was waiting to tell him the news.

His biggest doubt — the one that would have kept most people far away from an extreme environment like Everest — must have been about his own fitness. For the past few years Delaney had been battling a condition that made it hard for him to keep on weight. He became painfully skinny. “I used to take the piss out of him and say he looked like a POW or a Kenyan distance runner,” says Mark Orr, an Irish compatriot who met Delaney when they both climbed Aconcagua in Argentina in 2005 and later was best man at Delaney’s wedding. His friends weren’t quite sure what illness Delaney had. But a couple of years before he arrived at Everest in 2011, he had undergone surgery to remove a growth near his heart, then — to believe the reports — checked himself out of the hospital after just two days and showed up at work. He later told a friend he had removed the staples from his chest at home with pliers from the garage.

During the weeks that the team spent preparing for the climb to the summit, he was injecting himself with medication daily, says Chris Cannizzaro, then a 25-year-old climber from New Orleans who, as the only other English speaker among the eight paying members on the expedition, was Delaney’s tent mate. Delaney was extremely thin, but he was handling the altitude well and “tearing it up” on the mountain, says Cannizzaro. Until the last day. On the ascent to the final assault camp, Cannizzaro noticed that his friend was slowing down. “I didn’t want to say anything because you don’t want to mess with a person’s confidence up there,” says Cannizzaro. “Really, it’s a complete mind game. And with the lack of oxygen, you just never know what’s going on.”

At 7 p.m. a climbing guide named Noel Hanna led the group out. The plan was for Hanna, an endurance athlete and mountaineer from Belfast who had already summited Everest three times, to reach the top first and stay there as the members of the team arrived, reminding them not to stay too long. One by one, the climbers, each paired up with a Sherpa, hooked their carabiners to the pink ropes that had been set by the China Tibet Mountaineering Association to guide them, and followed Hanna out of camp on the long, slow push to the peak. The climbers wore full-body down suits to protect them from temperatures well below zero and oxygen masks to help them breathe. In the pitch-black darkness, the only light came from the headlamps that each climber wore. Snow swirled. Periodically the climbers had to step over or around the frozen, mummified body of someone from an earlier expedition. Given the extreme conditions, the climbers knew that if they couldn’t walk out of the death zone themselves, they, too, would have to be left behind.

Led by Hanna, the group reached the summit, altitude 29,029 feet, around 3:30 a.m. All but Delaney, that is. Just a couple of hundred feet below, he had become disoriented and had stopped moving. The guide at the rear of the group radioed Hanna at the summit, who hiked down to help. “I seen John, and right away I knew there was going to be trouble for him to get down,” says Hanna. Delaney was sitting and pointing to the summit. Through his oxygen mask, he was mumbling, “I want to keep going. I want to keep going.” Hanna told him he had to turn around and managed to get him to his feet. Delaney took perhaps 100 steps, then collapsed. Hanna checked for a pulse. There was none. Delaney was pronounced dead at 4:30 a.m., May 21, 2011.

*****

Two years later the company that Delaney ran has all but collapsed without him. And those he left behind are still looking for answers — some of which may lie on Everest with Delaney’s frozen corpse. Last November the U.S. Commodity Futures Trading Commission brought a complaint against Intrade for violating U.S. law by offering unregulated trading in options for financial instruments such as the price of oil, gold, and currencies, revisiting charges it brought in 2005. The company answered by demanding a jury trial and denying the CFTC’s claims.

Then things got worse. On March 10, 2013, Intrade announced on its website that because of possible “financial irregularities” and other circumstances, it was forced to suspend trading immediately. The company subsequently said that it had a cash shortfall of about $700,000 and requested “forbearance” from customers with balances of $1,000 or more to allow it to remain solvent. In the meantime, it is pursuing “two substantial monetary claims against two distinct parties” for a total of more than $3.5 million.

One of those parties, apparently, is Delaney himself. Irish court records show that Intrade has filed suit against his widow, Orla. According to regulatory filings by Intrade and an affiliated company, auditors identified more than $2 million in insufficiently documented payments to accounts controlled by John Delaney. Orla Delaney’s lawyer declined repeated requests for comment.

The saga of John Delaney’s short, mysterious life and death goes well beyond the fate of a small Irish company, though. Youthful, bright, and charming, Delaney was the embodiment of a big financial idea — one that may have been just a bit ahead of its time. The eloquent champion of the nascent world of prediction markets, Delaney had, for a brief moment, been a ubiquitous presence in the media — making many believe (if not quite bet on) the power of investing in the wisdom of crowds. The idea attracted high-profile investors like billionaire hedge fund managers Paul Tudor Jones of Tudor Investment and Stan Druckenmiller of Duquesne Capital, as well as News Corp.’s Rupert Murdoch. Over the years, Intrade’s markets had anticipated everything from the capture of Saddam Hussein (almost to the day in 2003) to the reelection of President Obama in 2012. And yet the company operated in a legal gray zone, attempting to build and rely on a customer base in the U.S. when it was not clear that it had the legal right to do so.

Indeed, the more one examines the history of Intrade and its late CEO, the more gray areas emerge. The company projected an image as a thriving international brand. In reality, it was never more than a small, struggling business. Delaney was typically cited as the founder and the visionary behind the idea. But he was neither. Friends and business partners of Delaney remember him as a straight arrow. But the allegations against him suggest that he may not have been.

In October, as this story was going to press, Intrade’s new management and directors were meeting in Ireland to reboot the company for a possible comeback. Intrade’s prospects remain murky 14 years after its founding. But to move forward, it must solve the mysteries of its past — most of them surrounding its longtime CEO. Two seemingly simple questions remain, though the answer to neither is simple: Who was John Delaney, really? And what was he seeking on the mountain?

*****

Like so many good ideas, it started in a bar. Or rather a series of them. It was 1999 in New York, and two brothers named John and Sean McNamara were wondering how they might cash in on the dotcom boom. The McNamaras were traders on the New York Board of Trade, and they spent their days buying and selling commodities like cotton, sugar, and coffee. Between orders, the brothers and their friends talked sports. One day John wondered, “Wouldn’t it be great if, instead of orange juice, we could trade the New York Giants, which is a subject we really know?” That led to conversations at various watering holes after work, and soon the McNamaras, along with a fellow trader named Greg DePetris and an Irish markets expert named Patrick Young, were raising money to build a business that would disintermediate bookies by offering futures markets in sporting events. The company would be called Global Sports Exchange.

For CEO, they recruited another trader, Ron Bernstein, who was also a serious collector of toys, from mint-condition railroad sets still in the box to vintage gasoline-powered racecars that are capable of reaching 100 miles an hour. Combining his passion for trading with his interest in toys, Bernstein had created and sold a memorabilia auction site called GoMainLine.com. He jumped at the chance to launch another company. “I thought it was an incredible idea and a very, very natural evolution of where sports betting could go,” says Bernstein. “It was so natural for us as floor traders, redefining what’s tradable.”

It wasn’t clear that such a business would be legal to run in the U.S., and Intrade’s founders knew there was a fine line between a regulated market and what U.S. authorities might view as gambling. In Europe, where gambling laws are much looser, they wouldn’t have the same issues. So they headquartered the company in Dublin and focused initially on European bettors. Bernstein set up in a new office park and began staffing. In the fall of 2000 he hired John Delaney, an Irish accountant who had worked at Allied Irish Bank and Oppenheim International Finance, as vice president of finance. The company raised $13.5 million in two rounds of financing and began building its technology platform. And it changed its name to Intrade.

The company’s official launch on Aug. 2, 2001, was a major marketing event in the U.K. It spent millions of dollars in an initial blast of branding. Virtually every taxi in London had a sign on it that said INTRADE.COM. “Back in those days we were running on a business model that wasn’t about revenue and it wasn’t about profits — it was about building brand,” says Joe Cross, an early investor and Intrade board member who also invested, through a company called Queensland Press, money from the family of Rupert Murdoch. “It doesn’t matter if you make money. As long as people know who you are, you can go raise more money off that. We were riding the wave.”

Then the bubble burst. Funding dried up. And Intrade quickly found itself struggling to keep up with rival sports-betting startups like Betdaq and Betfair, which used traditional odds to attract bettors who were used to, say, getting 5-to-1 that Everton would beat Chelsea.

Intrade’s system, modeled after a futures exchange, seemed perfectly natural to the traders who created it but was less intuitive to the average bettor. The company created so-called binary event contracts, with two possible outcomes. Generally the buyer would bet that an event would occur, while a seller would bet that it wouldn’t. Prices for each contract were quoted between 0 and 100, with each point equaling 10¢ of value. The higher the number, the greater the probability that the event would happen, according to the market.

Imagine a contract that says the New York Giants will win the Super Bowl. If a trader buys it at 20 (or $2 for each contract unit) and the Giants do end up winning, the contract would settle at 100 (or $10) and the trader would quintuple his money. If the Giants didn’t win, the contract would go to zero and he’d be out his money. Rather than charge the traditional vig of a bookie, Intrade collected 4¢ per contract from buyers for most transactions.

As it struggled to gain traction with customers, the company was burning through cash. In 2001 and 2002 it reported losses of $9 million. At the same time, Bernstein and the other American founders became increasingly concerned about having an operating role in a company that might be seen as an online sports-gambling site by U.S. authorities. Intrade had begun offering contracts on a variety of events, such as the closing price of stock indexes, but they weren’t attracting much action. If the business was to survive, it appeared that sports would be the driver.

So Bernstein made a couple of key decisions: He created a new company, called Tradesports, and made Delaney the CEO. Intrade would remain separate and lease its technology to Tradesports. Bernstein held on to his stake in Intrade, but returned to the U.S. and went back to floor trading. (Later the two companies would be recombined.) It was John Delaney’s business to run.

Intrade’s nonsports markets got a big dose of publicity near the end of 2003 when the trading volume and price spiked for a contract saying that Saddam Hussein would be “captured or neutralized” by the end of December. At that point the U.S. military had been searching for the deposed dictator of Iraq for eight months, and the trail appeared cold. But on Dec. 13, a few days after the spike in trading, Hussein was found hiding in a hole in the ground near Tikrit. Did the traders know something that the pundits didn’t? The following year the company’s profile rose even higher during the U.S. presidential election when its markets did an excellent job of predicting which states would be won by the incumbent, George W. Bush, and which would be won by his challenger, John Kerry.

It was a heady time for a company in the business of prediction markets. In 2004, New Yorker writer James Surowiecki published the book The Wisdom of Crowds, an enthralling examination of how, in many cases, large groups of people are smarter than an elite few. Like Intrade, the Iowa Electronic Markets, a not-for-profit market run by the University of Iowa, had outshone many pundits in predicting the presidential election results. The fact that Intrade and other sites allowed participants to make money on their collective wisdom intrigued journalists, inspiring plenty of press coverage (including, in 2005, a story in Fortune).

*****

As the company’s name recognition rose, Delaney emerged as a tireless promoter and eloquent spokesman — an enthusiastic Irishman with the gift of gab. He was lanky, soft-spoken, and friendly, often with a smile, and always happy to patiently explain how Intrade worked. In fact, Delaney was so adept at generating PR and such a visible figure that people assumed he was the company’s founder — an assumption he didn’t bother to dispute. The true founders found themselves edited out of the story. “If I had a quarter for every time someone said, ‘You’re a founder of Intrade?’ I’d be a rich man,” muses Sean McNamara. (After an interview with Fortune, Ron Bernstein edited the Wikipedia entry for Intrade to say that he and two other options traders, not Delaney, were the founders.)

Even as its media star was rising, Intrade faced some serious legal setbacks. The first came in October 2005, when the CFTC fined Intrade’s parent company $150,000 for offering trading to U.S. residents in prohibited commodity option contracts, such as Daily Crude Oil and Gold Futures Year End, and a currency bet: Intraday Euro vs. U.S. Dollar Rate. A bigger blow came a year later when Congress passed the Unlawful Internet Gambling Enforcement Act. The new law prohibited “gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet” and is unlawful. Instantly it was very difficult for Americans to use their credit cards to bet sports online. The company was still losing money, and now its trading volume plummeted. Intrade’s problems — and Delaney’s — were just beginning.

*****

To get to the town of Ballinakill, you take the M7 highway southwest from Dublin toward Limerick to County Laois. Then you turn off and ride the narrow, two-lane roads south through the rolling emerald hills of Irish farm country, past cattle grazing in fields bordered by hedges and ancient stone walls. By the time you get to the village where Delaney grew up, tractors are almost as common on the road as cars. On the day in May 2011 when his memorial service was held in St. Brigid’s, the roads were thick with traffic down from the city and the church was overflowing. But most days it is just another quiet, struggling rural town.

Delaney’s parents ran one of several pubs in town, and the family lived in the house adjacent to it. His father also helped run a family farm just outside town in an area called Heywood, after the well-known Heywood Gardens nearby. Delaney had an older sister and a younger brother. In a post on an Irish craft-beer website in 2009, under his common online pseudonym Heywood100, Delaney reminisced about growing up “in” a pub and remembered that the first draught he pulled was a half pint of Perry’s and “it cost 17p.”

Running the family farm or pub didn’t interest him, however. He got an MBA at University College Dublin and worked at various financial institutions before landing the job at Intrade in 2000. “He went up to Dublin and got the big outlook,” says one local, whose family has lived in Ballinakill for generations. “He wanted to have all the success fast — too fast.” But Delaney maintained close ties to his family and his hometown. He made his father, William, a director of Intrade. After William’s death, in 2009, Delaney’s brother Chris took his place. When Delaney moved into a house on the Old Bog Road near Kilcock, about 45 minutes west of Dublin, he named it Heywood.

Delaney’s friends reveled in the strange — and yet remarkable — physical feats Delaney would often pull. There was the time he got up at 3 a.m. on the day of his wedding in 2006 to run a marathon, his best man riding alongside on a bike. Or the time he climbed Ireland’s tallest mountain peak, Carrauntoohil, five times in a 24-hour period. Or the time he ran the entire course of the Irish Marathon … as a warm-up for running the Irish Marathon. It added up to a quirkiness that bordered on bizarre. “I was always struck by how much he walked,” says Cross, the investor and board member. “I mean, he was a massive walker. You know, he’d go off with his stick and pack and walk 20 miles. Just for hours on end he’d go walking.”

For all the strange escapes, the shareholders appreciated Delaney’s work ethic and his ability to keep the company going on a shoestring. “He seemed to be able to make things run on the smell of an oil rag,” says Cross. Publicly Delaney pulled off this managerial skill with charm. But many who worked with him found him hard to read and remote. Even close friends marveled at how little they knew him. “I think that John was eminently capable of keeping very big secrets from lots of people and also eminently capable of just being eccentric,” says Mark Irvine, one such friend, who was also the company’s chief marketing officer from 2002 to 2005. “And sometimes with John it was very hard to judge secret-keeping from eccentricity. And, you know, he was a complex person. I would never ever describe him as being a simple man. He was quite complex.”

By 2008 it was clear that sports were no longer a viable strategy. The 2006 Internet gambling act had cut off the supply of American bettors. So Delaney shut down Tradesports and doubled down on markets in political and cultural events. The run-up to the 2008 U.S. presidential election brought a huge spike in trading volume, but the firm continued to bleed money. That November, in a show of humor, Delaney even offered contracts on whether Intrade itself would be operational by the following spring or winter. In 2010 he moved the firm’s offices from its modern Dublin digs to cramped quarters far from the city center; it now shares a building with a tattoo parlor.

If there was one thing Intrade had going for it, it was its name. The company’s brand power drew interest from potential acquirers and partners. At one point well before its 2011 implosion, financial derivatives powerhouse MF Global held preliminary talks with Delaney about buying the company. Intrade also began working on a possible joint venture with the Minneapolis Grain Exchange. As a regulated exchange, the MGEX offered a way for Intrade to, at last, potentially operate legally in the U.S. Intrade, in turn, would provide the technology to allow the exchange to offer futures contracts to retail investors. But Delaney called off the deal in 2010, apparently feeling that Intrade wasn’t getting a fair shake. The Minneapolis Grain Exchange declined to comment.

Since Delaney’s death, and with the questions that have been raised about money transferred into his bank accounts, some of the company’s longtime shareholders have wondered if he had rejected potential deals because he didn’t want to open up the company’s books. “I chalked it up to Delaney not wanting to release control,” says John McNamara of Delaney’s unwillingness to go through with the Grain Exchange deal. “When we found out money was missing — that was the missing puzzle piece.”

Based on his web profile, Delaney seemed to be searching for something himself. In early 2009 he offered himself up as a business coach, “free to young entrepreneurs.” That fall he was on an Irish message board discussing the possibility of opening a microbrewery. In October he was wondering if it would be a good time to open a deli because he was “leaving the corporate world … not to make my millions but to take control of my situation.”

Even as Delaney wrestled with finding the right strategy for Intrade, he was struggling with serious health issues. He began to lose weight precipitously despite eating five or six times a day, says his close friend Orr. Delaney largely kept the details to himself, but he was frustrated that his doctors were having a hard time diagnosing and treating his condition. His response was to try to solve the problem himself.

In early 2010, he began investigating the possibility of attending medical school. That spring, using his Heywood100 handle, he became a regular on a U.S. website that provides information about “top foreign, international, and Caribbean med schools.” In a series of posts, he solicited advice on whether it would be “easier” to graduate from a Caribbean or Polish school, whether making a gift to the endowment might help him gain admission in Poland, and where he could get a good basic science crash course. It wasn’t just idle Internet chatter. On Oct. 1, 2010, Intrade’s still-active CEO enrolled at the Medical University of Lodz, according to admissions officials. But almost right away, according to friends, Delaney found out that Orla was pregnant with their daughter, and he dropped out on Oct. 16. He contacted the school again in April 2011 about reapplying for the fall, but then he left for Everest.

*****

Flipping through an old article on Intrade, Ron Bernstein, 51, smiles ruefully. “It was a really good idea,” says the company’s original CEO, who again took the reins of Intrade in late 2012 as lead director. Bernstein says that assuming he can recoup enough money for the company to operate and resolve its legal issues, he plans to once again take over as chief executive. The big-name early investors — Druckenmiller, Jones, LeBaron, the Murdochs — are all gone. But Bernstein sees promise in Intrade’s business model. He sees big opportunities for the company to operate legally within the realm of fantasy sports in the U.S. “There’s a tremendous amount of interest in the statistics that surround sporting events now,” he says. “We think we can make money in the space.” He’d like to relaunch the company in time for the NCAA’s March Madness basketball tournament. But first he has to put Intrade in order.

When Delaney collapsed on Everest, he left behind plenty of disorder. His grieving widow, Orla, has also had to deal with the fact that he didn’t have a will, let alone a burial. And, of course, there’s the lawsuit. And the rumors. Many have wondered if Delaney ever intended to come down from Everest. Once again, there is gray area. The expedition organizer, 7 Summits Club, filed numerous dispatches from the climb. None, save for the final one announcing his death, mentioned Delaney. One team member suggests that may be because Delaney himself asked that his name not be included.

At least a couple of Delaney’s friends back in Ireland did not think he was planning to try for the summit. His best man, Orr, says Delaney told him he was planning to climb only as high as the North Col, where he’d been in 2006. His health had been improving, he had been regaining weight, and he saw the trip as a way to gauge how far along he was in his recovery. “Safety was a big deal to him,” says Orr. “I wasn’t worried. Then again, I could have been very naive.”

According to Cannizzaro and Hanna, from the first day that Delaney arrived in Kathmandu, there was no question he was there to summit. Delaney seemed extremely confident in himself. Cannizzaro remembers him saying, “If I really thought there was a chance that I would die, I wouldn’t be here.” As to whether Delaney planned to commit suicide on the mountain, Hanna is skeptical. “It’s a perfect place to do it,” says Hanna, “but not the way John died. If you wanted to go, there are places where all you’d have to do is unclip for a moment and you’d be gone into the void.”

A few people, including some connected to the early days of Intrade, have even pondered the possibility that Delaney’s death is an elaborate hoax — a finish that would be oddly fitting for his mysterious life. It’s a notion that Hanna, who has been back to the north summit of Everest twice since that fateful 2011 trip, is quick to dismiss. “I can assure you he’s there,” says Hanna. “Because I’ve seen him where we left him, last year and this year again.” So, too, his secrets are likely to stay right there with him.

Additional reporting by Erika Fry and Marty Jones

This story is from the October 28, 2013 issue of Fortune.

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