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CFTC probes Polymarket over US trading after 2022 settlement
The platform's internal controls are under scrutiny as the Commodity Futures Trading Commission examines whether Polymarket adhered to a 2022 agreement by allowing American citizens to participate…
The platform's internal controls are under scrutiny as the Commodity Futures Trading Commission examines whether Polymarket adhered to a 2022 agreement by allowing American citizens to participate on its international exchange.
This investigation reopens a matter that the agency previously closed in 2025 without initiating formal charges. For a company striving to fit prediction markets within the framework of U.S. law, this query touches upon its fundamental structure. Polymarket entered into a settlement with the CFTC in January 2022, agreeing to pay a $1.4 million penalty for offering event-based binary options without proper registration. Part of that accord required the firm to prevent U.S. residents from accessing its overseas trading venue. Although the company implemented geofencing measures, both regulators and critics noted instances of traders accessing the site via VPNs. Furthermore, the platform has attracted crypto enthusiasts, integrating bitcoin deposits in October 2025 as part of a wider effort to enable funding accounts with digital assets.
Sources indicate that investigators are currently reviewing three specific areas: the sufficiency of Polymarket's geographical restrictions, its advertising campaigns within the United States, and the processes for new user sign-ups and customer safeguards on its U.S.-facing platform, which was rolled out late last year. The corporation maintains its headquarters in New York, while its offshore exchange operates through an entity registered in Panama. It is important to note that an inquiry represents an investigation, not a conclusive finding, and many such probes conclude without punitive action.
Polymarket is facing increasing regulatory attention amidst a broader landscape of scrutiny. In June, the Wall Street Journal reported that Polymarket compensated individuals to create videos depicting fabricated winning wagers, prompting senators Adam Schiff and John Curtis to urge the agency to launch a probe. Bloomberg also revealed that investigators were looking into the company's activity across social media channels. CFTC Chairman Michael Selig has characterized prediction markets as instruments for information discovery and hedging, asserting that federal bodies, rather than state governments, should be responsible for their oversight. Meanwhile, Enforcement Director David Miller has made a commitment to rigorously police this sector.
This enforcement pressure has a concrete example in the form of a case from April, where prosecutors charged a U.S. service member, Gannon Ken Van Dyke, with generating $400,000 from insider bets made on the international platform. The indictment alleges that he utilized a VPN and an "exit mode" that appeared to place him in a foreign nation. Van Dyke has refuted these accusations, and Polymarket has communicated that it referred the situation to the relevant authorities.
The scale of the operation elevates the significance of these regulatory matters. Intercontinental Exchange, the parent organization of the NYSE, committed to an investment approaching $2 billion in October 2025, and Bloomberg highlighted founder Shayne Coplan, who is 27, as one of the youngest self-made billionaires. The larger the platform grows, the more crucial its geographical boundaries become. Earlier this year, a small contingent of traders exploited Polymarket’s five-minute Bitcoin up/down contract, manipulating Binance's price in the final moments before each closing, according to a published study. Of the 821 wallets involved—roughly one in every 300 traders—$8.2 million was gained during the manipulated cycles, with 93% of the losses falling upon retail bettors. The study's authors observed no manipulation in the fifteen-minute contract, because a longer timeframe diffuses a fixed push, a critical lesson now that Nasdaq and Cboe have begun listing comparable binary contracts on equity indices.
Why it matters
This probe tests the limits of regulatory compliance for platforms attempting to operate in the US crypto space. Increased scrutiny signals a growing enforcement focus on prediction markets and digital asset platforms.
