Key Takeaways
- Polymarket has been fined $1.4 million by the CFTC and may maybe maybe also be compelled to shut down some of its markets.
- The prediction market provider provides events contracts, something that most interesting registered markets are allowed to complete.
- Though Polymarket uses cryptocurrency, it’s now not fully decentralized and is operated by a firm in Novel York.
The Commodity Futures Procuring and selling Commission (CFTC) has fined Polymarket $1.4 million and compelled the crypto-basically based predictions market Polymarket to shut some of its markets.
Polymarket Fined $1.4 Million
Per a CFTC press release made public recently, Polymarket’s mother or father firm, Blockratize, Inc., has been charged with “offering off-exchange tournament-basically based binary choices contracts.” The CFTC says that the platform provided larger than 900 of these markets. Per a commentary from Polymarket, the provider would per chance be compelled to shut three of these markets.
Polymarket allows users to wager on the outcomes of exact-world events, reminiscent of reported COVID-19 cases, national inflation charges, and political elections and nominations. Contracts of these kinds can most interesting be provided on a registered exchange, according to the CFTC.
“Polymarket creates, defines, hosts, and resolves the trading and execution of contracts for the tournament-basically based binary choices markets provided on its web web page,” the CFTC’s announcement reads.
As a outcomes of the settlement, Polymarket have to pay a $1.4 million civil financial penalty and end all markets displayed on Polymarket.com. The enforcement circulate comes at an inopportune time for the provider, which fair recently raised $4 million in a funding round.
Can Prediction Markets Evade Legislation?
Cryptocurrency-basically based prediction markets have a tendency to be belief to be an answer to lead obvious of U.S. rules that restrict such actions. The mainstream prediction market PredictIt limits investments to $850, to illustrate, while the Iowa Electronic Markets (IEM) limits positions to $500.
Polymarket is nominally a decentralized utility insofar because it doesn’t possess custody of user funds and doesn’t impose such limits on its users. On the opposite hand, Polymarket is operated by a firm in Novel York, which allowed regulators to dwelling the platform.
It is a ways risky if maximally-decentralized prediction markets, reminiscent of Augur and Omen, may maybe maybe maybe map the distinction of the CFTC and various regulatory our bodies.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and various cryptocurrencies.
Correction: This text in the initiating effect reported the CFTC had required Polymarket to shut down all of its markets. This turned into once now not dazzling and the reporting has been up to this level accordingly.
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