While desribing properties of the single auction equilibrium defined by theorem 1 in "Continuous Auctions and Insider Trading" A. Kyle conjectured that
one-half of the insider's private information is incorporated into prices and the volatility of prices is unaffected by the level of noise trading $\sigma^2_u$.
Mathematically, the above conjecture is expressed in the text as the following formula: $$\Sigma_1 = \mathrm{var}\{{\tilde{v}\mid \tilde{p}}\} = \frac{1}{2}\Sigma_0 = \frac{1}{2}\mathrm{var}\{{\tilde{v}}\} \tag{1} \label{one}$$ There $\tilde{v}$ denotes the ex post liquidation value ( a normal variable with mean $p_0$ and variance $\Sigma_0$) and $\tilde{p}$ denotes the price which is set by the market maker.
The model assumes that the insider and noise traders submit their market orders to the market maker who then sets the price at which they trade the quantity necessary to clear the market.
It is assumed that the market maker set the price deterministically, as a function of joint volume of orders submitted by the inisder $\tilde{x}$ and by the noise traders $\tilde{u}$: $$\label{two} \tilde{p} = p_0 + \lambda(\tilde{x} + \tilde{u}) \tag{2}$$
where $\lambda=2\Big(\frac{\Sigma_0}{\sigma_u^2}\Big)^\frac{1}{2}$
The insider define the size of its order $\tilde{x}$ deterministically as a function of the ex post liquidation value which he "observes" as an insider:
$$\label{three} \tilde{x} = \beta(\tilde{v} - p_0) \tag{3}$$
where $\beta=(\frac{\sigma_u^2}{\Sigma_0})^\frac{1}{2}$.
The volume of noise traders $\tilde{u}$ is a normally distributed random variable with mean zero and variance $\sigma^2_u$. Note that $\eqref{three}$ makes $\tilde{x}$ distributed as $\tilde{u}$ i.e. $\tilde{x}$ has zero mean and $\sigma_u$ variance too!
Substituting $\eqref{three}$ into $\eqref{two}$ and rearranging we have:
$$ \tilde{v} = p_0 + \frac{\tilde{p} - p_0}{\lambda \beta} - \frac{\tilde{u}}{\beta} \tag{4}$$
Thus
$$ \Sigma_1 = \mathrm{var}\{{\tilde{v}\mid \tilde{p}=p}\} = \mathrm{var}\{\frac{\tilde{u}}{\beta}\} = \frac{\sigma_0^2}{\frac{\sigma_0^2}{\Sigma_0}} = \Sigma_0 \tag{5}$$
so none of the insider's private information is incorporated into prices.
Where am I wrong?