A trail of public blockchain transactions has led South Korean police to 26 Polymarket users, putting 17.6 billion won ($12.7 million) in betting activity at the center of a growing legal dispute over crypto prediction markets.
According to The Asia Business Daily, the Gangwon Provincial Police Agency’s Cyber Investigation Unit had booked 26 people as of September 15, based on data submitted by the National Police Agency to lawmaker Yoon Kun-young’s office.
The largest individual betting amount among those investigated was about 5.7 billion won.
Police identified the users by analyzing publicly available blockchain transaction records using open-source intelligence techniques. The approach allowed investigators to trace activity despite Polymarket’s non-custodial, peer-to-peer structure, which does not maintain a conventional real-name customer database.
How Polymarket contracts work
Polymarket allows users to trade contracts tied to the outcomes of political, economic and social events. Contracts generally settle according to whether a specific event occurs, with winning positions receiving a predetermined payout while losing positions can become worthless.
Because the platform uses blockchain-based settlement, transaction activity can remain publicly visible even when the platform does not maintain a traditional customer database.
The Korean investigation centers on whether putting digital assets at risk on uncertain outcomes meets the legal definition of gambling.
Police have argued that Polymarket transactions can fall under Article 246 of South Korea’s Criminal Act because users wager property on events they cannot reliably control or predict. Authorities have also cited a Supreme Court precedent concerning the role of chance in gambling cases.
Users dispute gambling classification
The users under investigation argue that Polymarket should instead be viewed as a crypto-based derivatives or prediction market rather than conventional gambling.
The distinction could become important because Polymarket contracts can be traded through an order book and positions can be exited before an event reaches final settlement.
Kim Tae-rim, managing partner at AXIS Law, told The Asia Business Daily that these structural features could become part of the legal debate over whether Polymarket differs from traditional gambling.
Kim also said the prediction contracts described by users as derivatives do not currently fall within South Korea’s Capital Markets Act framework, which could limit their use as a direct defense in criminal proceedings.
The same classification question is being litigated elsewhere. Kentucky’s attorney general sued Kalshi and Polymarket in June on the argument that their contracts amount to unlicensed gambling.
South Korea blocks Polymarket access
The investigation follows an August 18 regulatory order blocking domestic access to Polymarket after South Korean authorities classified its prediction markets as an illegal gambling environment.
The Korea Communications Standards Commission (KCSC) said the platform’s winner-takes-all structure and markets based on events outside users’ control created a gambling environment for domestic users.
Polymarket had argued that its non-custodial P2P model, lack of Korean-won payments and absence of Korean-language services meant it should not be treated as an operator of an illegal gambling venue.
South Korean authorities rejected that argument, saying the technical characteristics or service structure of a platform do not prevent domestic laws from applying.
The access-blocking decision and the user investigation therefore address two related but separate questions: whether the platform provides an unlawful gambling environment in South Korea and whether individual users can face criminal liability for participating in its markets.
Prosecutors review cases
The latest referrals put the focus on what happens next at the prosecutorial and judicial stages.
The 18 referrals do not represent final court judgments. The materials reported by The Asia Business Daily and subsequently cited by crypto media do not indicate that the cases have resulted in convictions or that courts have yet determined whether Polymarket’s contracts constitute gambling under Article 246.
The cases are therefore expected to provide an important test of how South Korean authorities and courts classify blockchain-based prediction markets, particularly where contracts can be traded before settlement.
The investigation remains ongoing as prosecutors review the cases referred by police.
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