CFTC probes Polymarket over 2022 settlement regarding US user access

The Commodity Futures Trading Commission is reportedly investigating whether Polymarket violated a 2022 settlement agreement by allowing residents of the United States to utilize its offshore platform.

This inquiry reactivates a previous investigation that the agency concluded in 2025 without initiating formal charges. For an entity that has attempted to align prediction markets with existing United States legal frameworks, this question strikes at its fundamental nature. Polymarket entered into a settlement with the CFTC back in January 2022, agreeing to a $1.4 million penalty for offering event-based binary options without proper registration. As part of that agreement, the firm committed to preventing American users from accessing its international exchange. Although the platform implemented geofencing mechanisms, regulators and critics noted instances of traders accessing the site via Virtual Private Networks. Furthermore, the platform has attracted cryptocurrency enthusiasts, introducing bitcoin deposits in October 2025 as part of a broader strategy to facilitate account funding with digital assets.

Investigators are currently examining three specific areas: the effectiveness of Polymarket’s geographical restriction controls, the nature of its promotional activities within the United States, and the procedures for customer onboarding and protection on its US-facing platform, which was launched late last year. The company maintains its headquarters in New York while operating its offshore exchange through an entity registered in Panama. It is important to note that an investigation constitutes an inquiry, not a definitive finding, and many such reviews conclude without resulting in enforcement action.

This scrutiny Polymarket is facing is part of a larger regulatory movement. In June, reports from the Wall Street Journal indicated that Polymarket compensated individuals to create videos depicting fabricated winning bets, prompting senators Adam Schiff and John Curtis to call for the agency to launch an investigation. Bloomberg reported that investigators were also reviewing the company’s presence on social media. CFTC Chairman Michael Selig has positioned prediction markets as instruments for information discovery and hedging, arguing that oversight should rest with federal bodies rather than state agencies. Enforcement director David Miller has publicly committed to rigorously policing this sector.

Enforcement pressure is being tested by a specific case: in April, prosecutors brought charges against a US soldier, Gannon Ken Van Dyke, for earning $400,000 through insider wagers on the overseas platform. The indictment alleges that he utilized a VPN and an "exit mode" that appeared to be situated in a foreign nation. Polymarket has stated that it directed the matter to the relevant authorities, while Van Dyke has contested the accusations.

The magnitude of the platform increases the significance of its geographic boundaries. Intercontinental Exchange, which owns the NYSE, committed to an investment of approximately $2 billion in October 2025, and Bloomberg noted that founder Shayne Coplan, who is 27, is among the youngest self-made billionaires.

Earlier this year, a small cohort of traders exploited Polymarket’s five-minute Bitcoin up/down contract by influencing Binance’s price during the final moments before each closing period, according to a scholarly study. In this event, 821 wallets, representing roughly one in every 300 traders, profited $8.2 million from the manipulated cycles, with 93% of the losses being borne by retail bettors. The study’s authors observed no manipulation in the fifteen-minute contract, because a longer timeframe lessens the impact of a fixed push, a crucial lesson given that Nasdaq and Cboe have filed to list comparable binary contracts on equity indices.

This increased regulatory focus reflects a broader trend where established financial market participants and institutions are grappling with the integration and oversight of decentralized financial instruments.

Why it matters

This probe tests the limits of regulatory oversight for prediction markets operating across international borders. The scrutiny highlights the ongoing tension between platform operations and enforcement actions by agencies like the CFTC. Readers should watch how this investigation impacts future regulatory approaches to decentralized financial products.

Earlier coverage

• Nasdaq surges 1.2% as Bitcoin edges higher Oct 27
• Galaxy says time to accumulate bitcoin citing ETF demand and rising U.S. debt Oct 27