Key facts
- U.S. Senators John Curtis and Adam Schiff have urged the CFTC to investigate Polymarket for deceptive marketing.
- Polymarket is reportedly under an extensive CFTC investigation due to allegations of paying influencers to create fake bets.
- The platform previously paid a $1.4 million fine in 2022 for operating an unregistered financial exchange.
- A lawsuit has been filed against Polymarket's founder and CMO for allegedly targeting young Americans with deceptive marketing.
- The CFTC is expected to respond to the senators' inquiries by July 10.
Polymarket, a crypto prediction market platform, is facing an extensive investigation by the Commodity Futures Trading Commission (CFTC) following allegations that it paid online influencers to create fake bets and winnings targeting U.S. users. Senators John Curtis and Adam Schiff have urged the CFTC to probe the platform for deceptive marketing tactics, citing a Wall Street Journal report that indicated many influencers failed to disclose their partnerships.
The CFTC's investigation, which reportedly began earlier this year, is examining Polymarket's social media activity. This marks the latest scrutiny for the platform, which previously paid a $1.4 million fine in 2022 for operating an illegal and unregistered financial exchange, leading to a ban on offering its prediction markets to U.S. users. While a joint investigation by the CFTC and Department of Justice closed last year without charges, the current probe is focused on new allegations of deceptive advertising.
In addition to the regulatory scrutiny, Polymarket's founder, Shayne Coplan, and CMO, Matthew Modabber, are named in a lawsuit. This legal action claims they engaged in a "sweeping deceptive market campaign" to draw young Americans, particularly college-aged individuals and students, into gambling on the platform while obscuring the risks of losing money.
Senators Curtis and Schiff have requested a written response from CFTC Chair Mike Selig by July 10, seeking information on the status of the investigation, the legality of the reported advertising practices, and the commission's capacity to regulate such prediction markets.