Polymarket Under DOJ Scrutiny for Allegedly Allowing US Users to Bet

• Polymarket has been allegedly accused of manipulating market results.
• Polymarket’s “U.S. Presidential Election Winner” contract saw over $3.6 billion in trading volumes.
• The FBI raid of the Polymarket CEO’s home has been described as “political retribution” for correctly predicting or promoting a Trump victory.

The U.S. Department of Justice (DOJ) is launching investigations into Polymarket for allegedly accepting trades from U.S.-based users following Donald Trump’s election victory, the primary draw to the crypto prediction market/betting site.

Polymarket Under Fire

The DOJ is now probing Polymarket for potentially allowing U.S. users to access and bet on the platform.

Furthermore, the crypto prediction betting platform also stands accused  of market manipulation and rigging the polls in Trump’s favor. Speaking on the matter, Polymarket CEO Shayne Coplan, expressed his concerns:

In 2022, Polymarket settled with the Commodity Futures Trading Commission (CFTC) after the regulator accused Polymarket of operating an unregistered derivatives market. Following this, Polymarket agreed to ban U.S. users from accessing the platform.

The platform surged in popularity ahead of the U.S. election, with the “Presidential Election Winner” contract pulling over $3.6 billion  in trading volumes alone. Interestingly, French authorities are also considering banning the platform after a local banker won $50 million on his U.S. election bet.

Critics have argued that wealthy Polymarket bettors or collusion could skew public perception of events or outcomes. Others such as Ethereum co-founder Vitalik Buterin, have argued that prediction markets are an accurate representation of public sentiment.

That said, the platform’s forecast was spot on two weeks before the election results came in.

FBI Raid

Matters deepened following the Federal Bureau of Investigation’s (FBI’s) raid on Coplan’s home, seizing his phone and other electronic devices. Interestingly, Coplan wasn’t taken into custody.

This has prompted a mixed response. Some view it as politically motivated based on the fact that a majority of people betting were favoring Trump to win the election. This includes a now-deleted post  from Coinbase CEO Brian Armstrong, who described the raid as “political retribution.” He has since backtracked and cleared the air on this, posting:

Speculatively, the investigation results could cement prediction markets as wholly corrupt and manipulative platforms if such evidence is found. If not, Polymarket and its peers may emerge as powerful—and uncomfortably accurate—tools of the Web3 information age.