Solving that problem is pretty much Augur's claim to fame. It's a combination of outcome reports by randomly-selected REP holders, possible disputes by bettors who post a bond and trigger a larger group of REP holders, and (after several escalating rounds of that) a potential fork of the whole thing on the theory that the version of REP that reports the truth will have more market value. (I think in that case REP holders have to choose which fork they'll migrate to.)

Whether this actually works over the long haul, we'll have to see, but it's a pretty interesting experiment.

It looks like Augur has no way to validate the "REP holders" though?

This means a sybil attack can be launched by anyone behind the Augur project (assuming they set aside large reserves of REP for themselves, how would anyone know?), or anyone who acquired thousands of ETH in the presale for $0.50USD, or anyone with excessive capital can attack any Augur "prediction" and manipulate the outcome in their favor.

Augur essentially gives total power to manipulate "truth" though tokens / capital.

(edit, downvoting to suppress information? please explain why this post is wrong)

They make no attempt to validate individuals. The more REP you have, the more influence you have. It's not exactly a sybil attack since you can't add influence without cost.

I was about to say they do depend on a REP-weighted majority attempting to maximize the amount and value of the REP they hold. But that's not actually true since the forking mechanism lets a significant minority fork off in their own direction. This is the final backstop that (theoretically) prevents outcome manipulation by a majority REP holder; the general public can just switch to the fork that told the truth. On that fork, the liars will no longer hold REP.

This would be a big deal but it shouldn't happen often, since the credible threat helps dissuade liars in the first place; they'll lose money and fail anyway.

But I don't know what happens to the ETH at stake in this scenario.

(Btw it wasn't me downvoting, these are good questions. I'm not with Augur and don't even hold REP. Have an upvote.)

There was maybe one active assassination market and it didn't even have that much interest. The world cup and the current cryptocurrency markets were where most of the bets happened.