The Commodity Futures Trading Commission (CFTC) fined crypto betting service Polymarket $1.4 million, ordered it to shut down its various markets and offer users full refunds on charges the company failed to register with the regulator.
The CFTC announced the penalties Monday, ordering Polymarket (the operating name for Blockratize, Inc.) to wind down all of its markets because it did not seek a Designated Contract Market (DCM) or Swap Execution Facility (SEF) registration, two requirements under the Commodity Exchange Act for companies offering binary options in the U.S.
Polymarket is a crypto betting service which allows users to pick one of at least two options on given trades, such as who might win the 2020 presidential election. According to an order published by the CFTC, Polymarket offered at least 900 such markets over the last 18 months.
These markets are swaps under federal law.
Polymarket cooperated with the investigation, according the CFTC’s press release, leading to a reduced fine. The company will stop offering markets by Jan. 14, 2022 and commit to making all funds available to users by Jan. 24, according to the order. Polymarket will also cease and desist any further violations of the CEA, though it does not appear the company itself will be shut down.
In a statement, Acting Enforcement Director Vincent McGonagle said “all derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space.”
A Polymarket spokesperson did not immediately provide a comment.
Bloomberg reported that Polymarket was under investigation in October 2021.
