CFTC – The Commodity Futures Trading Commission has slapped Polymarket with a fine of $1.4 million. The regulator also ordered it to wind down all markets, that do not comply with the Commodity Exchange Act (CEA), displayed on the platform.
Polymarket is run by Blockratize Inc., which is a betting platform. It enables users to wager on current events – ranging from pop culture to politics, using cryptocurrencies. Some popular bets for 2021 have been whether or not Hollywood celebrities Ben Affleck and Jennifer Lopez would get engaged. And if the United States would cross the 100,000 new daily COVID cases before January 1, 2022.
Users have two options for the scenario and place their “crypto”. This qualifies the market as “swaps” under federal law. According to CFTC, Polymarket has offered over 900 different event markets since its establishment in 2018. The regulator highlighted that Polymarket failed to obtain a “Designated Contract Market” and “Swap Execution Facility” registration. These are requirements under the CEA.
Vincent McGonagle, the acting director of enforcement at CFTC, in a statement, said the derivatives markets must operate within the bounds of the law. This should be regardless of the technology used and include those in the DeFi space. He believes that market participants should actively engage with CFTC. This will ensure that the markets remain robust and transparent. It will also provide the needed protection to customers under the CEA and CFTC’s regulations.
Polymarket, on late Monday afternoon, tweeted that the platform has agreed to a settlement with the CFTC. As such, it is exciting to move forward and focus on the company’s future. Polymarket stated that the three markets that don’t comply with the Act will be prematurely resolved.
CFTC, on its part, said Polymarket had cooperated with the investigation and this helped it secure a low fine. Polymarket markets will end by January 14, 2022 and users would get their refunds by January 24.