CFTC Launches New Probe Into Polymarket's Compliance With 2022 Settlement

The Commodity Futures Trading Commission has reopened an investigation into whether Polymarket violated a 2022 enforcement settlement, according to Reuters reporting earlier today. The inquiry had been closed in 2025 without any charges being filed. For a company that has aimed to operate prediction markets within US legal boundaries, the matter is central to its business model.

In January 2022, Polymarket settled with the CFTC for $1.4 million, paying the penalty for offering unregistered event-based binary options. It agreed to bar American users from its offshore platform. Geolocation controls were later put in place, but regulators and critics noted that traders accessed the site using VPNs. The platform has also drawn crypto users, adding bitcoin deposits in October 2025 as part of broader efforts to allow digital asset funding.

Investigators are examining three areas, sources said: the effectiveness of Polymarket's geolocation measures, its advertising within the United States, and the onboarding and consumer protections on its US-based platform, which launched late last year.

Polymarket is headquartered in New York and runs its offshore exchange through a Panama-registered entity. An investigation is an inquiry, not a finding, and many such probes conclude without enforcement action.

Polymarket’s mounting regulatory scrutiny

This probe is part of a broader enforcement push. In June, the Wall Street Journal reported that Polymarket paid individuals to create videos of fictitious winning bets, leading Senators Adam Schiff and John Curtis to urge the agency to open an investigation. Bloomberg reported that investigators were examining the company's social media activity.

CFTC Chairman Michael Selig has described prediction markets as tools for hedging and information discovery, arguing that federal regulators, not states, should oversee them. Enforcement Director David Miller has pledged aggressive policing of the sector.

Enforcement pressure has a test case. In April, prosecutors charged US soldier Gannon Ken Van Dyke with making $400,000 from insider bets on the offshore platform. The indictment says he used a VPN and an “exit mode” that made his location appear to be abroad. Van Dyke has denied the charges, and Polymarket says it referred the matter to authorities.

The platform's size raises the stakes. In October 2025, Intercontinental Exchange, the parent of the NYSE, agreed to invest roughly $2 billion. Bloomberg counted founder Shayne Coplan, 27, among the youngest self-made billionaires. The larger the platform, the more its geographic restrictions matter.

Earlier this year, a study found that a small group of traders exploited Polymarket's five-minute Bitcoin up/down contract by manipulating Binance's price in the final seconds before each close. Only 821 wallets — about one in every 300 traders — extracted $8.2 million from the manipulated cycles, with 93% of the losses falling on retail bettors.

The study's authors found no manipulation in the fifteen-minute contract, as a longer window dilutes a fixed push — a lesson that matters now that Nasdaq and Cboe have filed to list similar binary contracts on equity indices.