The U.S. Commodity Futures Trading Commission (CFTC) has ordered a “decentralized” prediction market platform to shut down non-compliant markets and pay a fine of $1.4 million. “Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as ‘event markets,'” said the derivatives regulator.
CFTC Takes First Crypto Enforcement Action of the Year
The Commodity Futures Trading Commission (CFTC) has taken the first crypto enforcement action of the year in the U.S. The derivatives regulator announced that it entered an order Monday “filing and simultaneously settling charges against Delaware-registered Blockratize, Inc. d/b/a Polymarket.”
The company was charged “for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF),” the CFTC wrote. The regulator detailed:
The order requires that Polymarket pay a $1.4 million civil monetary penalty, facilitate the resolution (i.e. wind down) of all markets displayed on Polymarket.com that do not comply with the Commodity Exchange Act (CEA) and applicable CFTC regulations.
The New York city-based company must also “cease and desist from violating the CEA and CFTC regulations, as charged.”
According to the order, “By January 14, 2022, [the] respondent shall cease offering access to trading in markets displayed on Polymarket.com” unless they comply with the CFTC’s rules.
Polymarket describes itself as “a decentralized information markets platform, harnessing the power of free markets to demystify the real-world events that matter most to you.” It advertises that users can “bet” on their beliefs about the outcome of real-world events.
The site lists a number of markets that users can bet on, such as “What percent of US Covid-19 cases will be from the Omicron variant on January 1, 2022?” and “Will annual inflation in the European Union be 5.4% or more in December?”
However, its website notes: “The markets listed here are for informational purposes only. We take no profits from them.”