By
Mayowa Adebajo
April 11th, 2024
According to Bloomberg, “CFTC investigations don’t always lead to enforcement cases and Polymarket hasn’t been accused of wrongdoing”.
The global financial news website, Bloomberg, has reported that the New York-based decentralized prediction market, Polymarket, is being investigated by the United States Commodity Futures Trading Commission (CFTC) regarding a few products and their registrations.
According to the tips Bloomberg received from its sources and published on Saturday, the United States Commodity Futures Trading Commission (CFTC) is investigating the decentralized prediction marketing on whether it allows its customers to trade swap or binary options.
“CFTC is investigating whether Polymarket is letting customers improperly trade swaps or binary options and if it should be registered with the agency”, read the report.
The derivatives regulator is yet to confirm whether PolyMarket is currently under its investigation as of the time of writing this report.
However, a spokesperson for the decentralized prediction market stated that: “Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry.”
Also in its defense, the prediction site revealed that it is only offering bettors an opportunity to make money. It continued that it is also providing information on what is likely to happen in the future on different important topics.
Bloomberg indicated in the report that PolyMarket had hired James McDonald, the former director at the CFTC’s enforcement division, who is also the current partner at legal firm Sullivan & Cromwell, to address the probe.
Notably, Polymarket is a host of various predictive markets that allow users to speculate on the possible result of several future events. On the platform, customers participate and stake in events using the USDC stablecoin. Available information shows that the Platform does not take positions against its customers and hosts the smart contract interface allowing users to interact with the protocol.
According to Bloomberg, “CFTC investigations don’t always lead to enforcement cases and Polymarket hasn’t been accused of wrongdoing. If firms are sanctioned by the regulator, they can face fines and restrictions on offering products.”
Just a year ago, it raised $4 million in a Polychain Capital-led funding round. The round also saw the likes of CoinShares CSO Meltem Demirors, former Coinbase CTO Balaji Srinivasan, and AngelList CEO Naval Ravikant.
PolyMarket has allowed speculation on COVID case numbers, CryptoPunks floor prices, and Donald Trump‘s presidential prospects. Currently, it is focusing on sporting events and crypto price forecasting.
The platform itself recently lost a bet against the Cardano blockchain. It placed a $50,000 bet on whether the Cardano project would be able to realize its smart contract upgrade before a particular date. It also placed a bet that Cardano native token, ADA, would not hit $3. Unfortunately, PolyMarket lost on both bets.