Polymarket Probe Ended by DOJ in Win for Crypto Bets Under Trump

A pair of US investigations into crypto-betting platform Polymarket that went full-throttle in the waning days of the Biden administration are now being shut down just as Donald Trump’s White House seeks to give the industry a boost.

The predictions exchange received formal notice earlier this month from the US Justice Department and Commodity Futures Trading Commission that the probes had ended, according to a person with direct knowledge of the matter, who asked not to be identified discussing the confidential inquiries.

Polymarket CEO Shayne Coplan

Photographer: Michael M. Santiago/Getty Images

Representatives for Polymarket, the CFTC and DOJ declined to comment.

The decisions are the latest example of US authorities reversing course on Biden-era actions involving digital-asset firms. Some in Washington are celebrating what’s being billed as “Crypto Week” with plans to usher in industry-backed rules that have sent the price of Bitcoin to a record.

Polymarket’s popularity surged during last year’s election campaigns as users flocked to the platform to place cryptocurrency wagers on the outcome. But that also drew investigators, examining whether the site was accepting trades from US-based users in violation of a previous settlement with federal regulators.

The situation escalated dramatically a week after the November elections, when FBI agents carried out a pre-dawn raid at the Soho penthouse of Shayne Coplan, the force behind Polymarket. Soon after, the 27-year-old chief executive officer lashed out on social media, describing the action as a “last-ditch effort” to go after companies deemed to be associated with President Joe Biden’s political opponents. He also made light of the seizure of his mobile phone on the same day.

The bravado captured the mood in the broader crypto community, which saw Trump as a full-throated proponent who would reverse Washington’s Biden-era crackdown on crypto firms deemed to be running afoul of regulations.

So far, that has proved right. Congress is expected to send the first major legislation to regulate some digital assets to the president’s desk for his signature after a House floor vote this week.

Read more: Traders Defying US Ban Embrace Polymarket With Election Bets

CFTC Chairman nominee Brian Quintenz

Photographer: Paul Miller/Bloomberg

The confluence of digital assets and prediction markets — which allow users to bet on all sorts of future events — stand to occupy a chunk of the CFTC’s time in the Trump administration.

Brian Quintenz, an executive at a16z, the digital asset-focused arm of venture-capital giant Andreessen Horowitz, has been nominated to lead the agency. Quintenz has served on the board of directors of Kalshi, Polymarket’s chief rival.

The CFTC had its own investigation into the platform. The derivatives regulator, which oversees prediction platforms because their contracts are considered akin to swaps, had entered into a settlement with Polymarket in January 2022 over allegations it failed to register with the agency. As part of the deal, Polymarket vowed to wall off US traders from its exchange.

Both the CFTC and Justice Department lawyers in Manhattan were investigating whether the New York-based platform continued accepting wagers from people in the US using virtual private networks or other means to bypass the company’s controls. The prediction market notched about $2.6 billion in trading volume in November.

The resolution of the two investigations may even pave the way for Polymarket to officially re-enter the US market. That could include registering with the CFTC as a futures exchange or potentially acquiring another entity with a CFTC license.

Polymarket has been building a war chest with new investment rounds led by Peter Thiel’s Founders Fund. It also recently announced a partnership with Elon Musk’s X and xAI to offer event forecasts on the social media platform.

--With assistance from Ava Benny-Morrison.

To contact the reporters on this story:
Lydia Beyoud in Washington at lbeyoud2@bloomberg.net;
Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story:
Megan Howard at mhoward70@bloomberg.net

David Scheer

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