In Brief:
- Polymarket is being investigated by the US CFTC.
- The company has recruited James McDonald to manage the investigation.
Polymarket, a decentralized prediction market situated in New York, is being investigated by the US Commodity Futures Trading Commission (CFTC).
According to a Bloomberg report, the CFTC is investigating whether Polymarket is allowing its users to trade binary options and swaps that should be registered with the financial regulator. The CFTC has not confirmed whether it is investigating Polymarket.
Polymarket is strongly dedicated to complying with applicable rules and regulations and to giving information to regulators that will assist them with any inquiry according to a spokesman.Â
The company has recruited James McDonald, a former director of the CFTC’s enforcement division and current partner at law firm Sullivan & Cromwell, to manage the investigation, according to the report.
Polymarket has a number of unique predictive marketplaces where users can use the USD Coin stable token to wager on the outcome of future events. Polymarket takes no sides with its customers and offers a smart contract interface via which users can interact with the protocol.
According to the report, the inquiry is ongoing as Polymarket tries to negotiate a new round of funding, with anonymous sources claiming the company might be valued at close to $1 billion.
Polymarket raised $4 million in fundraising in October 2020, led by Polychain Capital and including CoinShares CSO Meltem Demirors, former Coinbase CTO Balaji Srinivasan, and AngelList CEO Naval Ravikant.
Polymarket isn’t the only company that provides decentralized prediction markets; Augur launched a Polygon version of its platform in early October.
With the increasing adoption of cryptocurrency and DeFi, regulators are also trying to regulate them. Recently, Tether and Bitfinex were fined $42.5 million by the CFTC for breaking regulations.
