The decentralized prediction platform Polymarket is facing intense scrutiny from regulators and the public alike for its actions.
Over the course of the day, there have been reports that the US Commodity Futures Trading Commission subpoenaed data from users in the wake of backlash regarding its controversial Wildfire Betting Markets.
Wildfire betting is controversial
Polymarket is being criticized for its decision to allow bets about the California wildfires. The site had eight markets that were active at the time this article was published. This attracted significant interest from its users.
Polymarket marketed these markets to provide real-time information on major social events. However, the public response was generally negative.
The industry leaders condemned the action as exploitation, accusing it of making money off human suffering. Some users on social media condemned the site, saying that it trivialized the destruction of life and property.
[Editor’s Note: Free-open prediction markets create some novel Libertarian discussions. Monetarily incentivizing a disaster such as this produces financial incentives for the fire to spread (or be put out.) Should any market grow sufficiently in size, there would be motivation for bettors to break the law to maximize gains. In reverse, it would be considerably more challenging for a bettor to stop the fires for profit single-handedly.
There’s even an argument that residents could theoretically hedge against personal losses by using the prediction markets as a form of partial insurance.]
The wildfire markets attracted a notable amount of participation despite the negative reaction. The trading volumes of two markets each reached close to $100,000, but other markets saw lower engagement with volumes under $50,000.
Polymarket, in an attempt to alleviate concerns, has included disclaimers stating the platform’s goal to offer accurate predictions that will aid with making decisions during important events.
Subpoenas from the CFTC
The controversy occurs amid a broader CFTC investigation, in which the agency has reportedly ordered Coinbase to provide user data related to Polymarket.
Eric Conner (a contributor to Ethereum’s network) shared on January 8 a screenshot from an email describing the subpoena. Email revealed the CFTC wants Coinbase to reveal certain information about customers.
Coinbase assures users that they do not need to take action as the company will comply with any subpoena, unless it is legally prohibited. Coinbase must receive any legal documents by Jan. 15th, 2025 at the end of the business day to stop the disclosure.
Meanwhile, crypto industry players have described the CFTC’s subpoena as a You can also read more about it here. The SEC, led by Gary Gensler, has a more lenient attitude towards the crypto-industry than the SEC.
Gabriel Shapiro is a crypto-friendly lawyer.
“The CFTC is very risky for crypto. Much more so, in theory, than the SEC.”
Regulations and Regulatory Examination
Polymarket is under increased scrutiny following its prominence during the US election of 2024, when it was a leading source for political predictions.
The FBI conducted a raid on the Polymarket CEO Shayne Cplan’s home after this increased visibility.
The investigation was reportedly centered around possible violations of US participation restrictions. The CFTC at that time announced an investigation into foreign platforms providing exposure to US clients.
Meanwhile, Polymarket You can also find out more about the following: In 2022, the platform agreed to pay $1.4 Million in fines in order to offer binary options that are not regulated. In the agreement, it was agreed that US customers would be banned from the service.
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