Pentagon officials are to cancel immediately a Dublin-based scheme that would reward speculators who predict terrorist attacks and political assassinations.
The scheme, due to begin enlisting traders today, has caused a major controversy in the US with growing calls for the resignation of Mr John Poindexter, the head of the Pentagon's Terrorist Information Awareness Office.
Tradesports.com, an online futures trading company based in Parkwest business park in Dublin, has confirmed that the scheme was to be run through its website and that it had been in consultation with technical and other officials in the Pentagon to set up the scheme.
Under the project, speculators could bet on global political events such as the assassination of Yasser Arafat or the next major terrorist attack in the United States. The Pentagon had hoped to use the market's beliefs to better predict when terrorist attacks were likely to happen.
However, both Republican and Democrat legislators threatened to withdraw funding for the entire Terrorist Information Awareness budget unless the Tradesports scheme was immediately abolished.
Details of the project were released for the first time on Monday by Democratic Senator Ron Wyden, who called it "grotesque" and "bizarre". Senator John Warner, Republican chairman of the Senate Armed Services Committee, also called for an immediate end to the project, which was due to begin trading on October 1st.
US Deputy Defence Chief, Mr Paul Wolfowitz, said that he had only heard of the project through a news report and called for it to be immediately cancelled.
Pentagon spokesman Mr Glen Flood confirmed yesterday that the project was "totally dead".
Tradesports chief executive Mr John Delaney said the company had now opened a trade on whether Mr Poindexter will survive the controversy and remain in his job by the end of August.
The New York Times and many other newspapers have called for the resignation of Mr Poindexter, a former national security adviser.