CFTC Starts Investigating Decentralized Polymarket Prediction Platform

The CFTC starts investigating the decentralized polymarket Prediction platform while the platform hired James McDonald, CFTC enforcement head to handle the probe as we are reading more in our latest cryptocurrency news today.

The New York-based decentralized prediction market Polymarket came under investigations from the United States Commodity Futures Trading Commission and the reports noted that the CFTC is investigating whether Polymarket allows the customers to trade binary options and swaps that could be registered with the financial regulator and it is yet to confirm whether it is investigating Polymarket.  One spokesperson of the platform said:

“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 report claims that the company engaged the former director of the CFTC enforcement division and partner at legal firm Sullivan & Cromwell, James McDonald to address the probe. Polymarket hosts a variety of novelty predictive markets which allow the users to speculate on the outcome of the future events using the USD Coin. Polymarket doesn’t take positions against its customers and hosts the smart contract interface allowing the users to interact with the protocol. The report asserted that the CFTC starts investigating Polymarket because of the talks to secure a new round of funding with anonymous sources, claiming the raise could see the company valued at $1 billion.

Polymarket secured a $4 million funding round led by  PolyChain Capital which saw participation from Coinshares, former Coinbase CTO Balaji Srinivasan, Meltem Demirors, and AngelList CEO Naval Ravikant. Polymarket is not alone in offering the decentralized prediction markets with Augur launching the Polygon deployment of the platform at the start of October. While it offers an eclectic range of markets including the speculation on COVID case numbers, CryptoPunks floor prices, and Donald Trump’s presidency, Augur markets focused on crypto price predictions and sports forecasting.

According to a CFTC statement, Kraken allowed US customers to access the products which were supposed to be banned for them. The order requires Kraken to pay a $1.25 million civil monetary penalty to cease and desist from more violations of the Commodity Exchange Act. The exchange founded in 2011 allowed the US customers to trade with the margin products between June 2020 and July 2021 and got accused of failing to register as a futures commission merchant. CFTC acting enforcement director Vincent McGonagle said that to offer these products the company have to register with regulators.