Crypto prediction platform Polymarket fined $ 1.4 million by CTFC

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New York-based crypto prediction platform Polymarket has reached a deal with the Commodity Futures Trading Commission (CFTC) to pay a fine of $ 1.4 million.

Polymarket is a decentralized platform that allows users to bet on the outcomes of event markets such as pro-sports games and political elections through binary options contracts.

On January 3, the CFTC announced that it had filed an order and simultaneously settled the charges against Polymarket, the platform having operated an “unregistered or unidentified illegal facility” since June 2020.

Under the order, Polymarket is required to pay a civil fine of $ 1.4 million as well as curtail any markets in the platform that do not comply with CFTC and Commodity Exchange Act regulations. (CEA). Polymarket responded with a tweet on Jan. 4, stating that they were “excited to move forward.”

We are delighted to confirm that we have reached an agreement with the CFTC and are delighted to move forward and focus on the future of Polymarket.

In accordance with the ordinance, the 3 contracts having lasted after 1/14 which do not comply with the law will be terminated prematurely. More soon

– Polymarket (@PolymarketHQ) January 3, 2022

The CFTC has said that event market contracts backed by a pair of binary options “constitute swaps” under its jurisdiction and that platforms offering market exposure should be regulated by the CFTC and CEA.

In the announcement, CTFC Acting Director of Enforcement Vincent McGonagle urged derivatives platforms to register with the enforcement agency, paying particular attention to those that operate in the decentralized finance sector (DeFi):

“All derivatives markets must operate within the limits of the law whatever the technology used, and in particular those of the space known as decentralized finance or” DeFi “.”

The CFTC, however, noted that Polymarket had received a reduced civil monetary penalty due to its “substantial cooperation” with the platform’s investigation.

Related: Will US Regulators Turn Stablecoins Into High Tech Banks?

Cointelegraph reported in October 2021 that the CFTC had launched its investigation into Polymarket, the platform reportedly hired former CTFC chief enforcement officer James McDonald to handle the investigation.

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