Event-betting platform Polymarket must pay $1.4 million and “wind down” markets violating the CFTC regulations.
The Commodity Futures Trading Commission (CFTC) ordered Polymarket – a decentralized platform that allows users to bet on the outcome of current events – to pay a $1.4 million civil monetary penalty. The agency claimed that the company did not seek a Designated Contract Market (DCM) or Swap Execution Facility (SEF) registration.
CFTC on the Hunt Again
According to an announcement by the government agency, Polymarket must also “wind down” all markets displayed on its website that do not comply with the Commodity Exchange Act (CEA) and CFTC regulations.
Acting Director of Enforcement – Vincent McGonagle – noted that all derivatives markets must operate within the current law requirements regardless of the employed technology. The executive said those in the DeFi space should even be monitored under greater attention.
“Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent, and afford customers the protection provided under the CEA and our regulations,” McGonagle added.
Upon receiving the penalty, Polymarket agreed with CFTC’s settlement and is “excited to move forward” and focus on its future.
We’re pleased to confirm that we’ve successfully agreed to a settlement with the CFTC, & are excited to move forward & focus on the future of Polymarket.
As per the order, the 3 markets lasting past 1/14 that don’t comply with the Act will be prematurely resolved. More soon
— Polymarket (@PolymarketHQ) January 3, 2022
Built on the Ethereum network, Polymarket is a decentralized prediction market that enables individuals to bet on the outcome of real-world events. Before clients can start speculating, they must deposit USDC into their wallets. Then, they can stake the assets on the future result of highly-debated topics and earn profits if right.
Since its interception, the entity has offered more than 900 separate event markets. Some of its most popular ones include: “Will Trump win the 2020 presidential election?” or “Will Ethereum be above $2,500 on July 22?”
The CFTC’s Previous Charges
Polymarket is not the first crypto-related company to get fined by the CFTC. In August last year, the digital asset exchange – Bitmex – agreed to pay $100 million after the government agency accused the former of avoiding US regulations. Specifically, the CFTC blamed the company for operating an unregistered derivatives platform.
Shortly after, the Commission fined the trading venue Kraken with a $1.25 million civil monetary penalty. It claimed that the latter supposedly allowed US customers to access products prohibited for them.
Subsequently, last October, the CFTC ordered Tether and Bitfinex to pay a total of $42.5 million for breaking the law. The organizations were also instructed to desist from any further violations of the CEA.