The CFTC is investigating if the Polymarket has violated any existing regulatory rules.
The largest prediction market on the blockchain Polymarket has become the subject of an investigation by the US Commodity Futures Trading Commission (CFTC), Bloomberg reports, citing sources.
According to them, the regulator intends to find out whether the platform has not committed violations in the field of trading in swaps and binary options and whether it should have registered to provide services in the United States. Polymarket users can place bets on real-world events like Donald Trump's new presidential term or the wedding of Jennifer Lopez and Ben Affleck.
“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry,” the company said.
Polymarket is based in New York and, according to Bloomberg sources, is in talks with investors to raise funds at a valuation of nearly $1 billion.
In March, ErisX withdrew an application to launch futures contracts for NFL games similar to Polymarket's offer, finding no opportunity align them with the CFTC requirements. The attention to Polymarket is also due to the current tightening of regulation of stablecoins, in which the platform allows placing bets, Bloomberg notes.
Polymarket hires ex CTFC enforcement head to address the probe
As part of the ongoing probe, Polymarket turned to James MacDonald, a partner at the law firm Sullivan & Cromwell, who until last year headed the CFTC's enforcement department. The firm says it does not accept custody of client assets and only displays the markets that exist on the Ethereum blockchain.
In addition, according to her, the service helps to understand the flow of disinformation and to form a more objective view of future events in geopolitics and other important areas.
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“With pricing, you get infinitely accurate predictions about the likely outcome of a particular event. This feature can have tremendous social value,” Shane Coplan, founder of Polymarket, said earlier.