Crypto-powered prediction market Polymarket and its founder are facing heat from US regulators for potentially serving American customers, while an employee at its competitor Kalshi appears to be echoing wash-trading allegations.
According to Bloomberg, the DoJ is investigating Polymarket for allegedly accepting bets from US-based customers. Punters on the platform appeared to overwhelmingly favor Donald Trump to win the election, putting Polymarket at odds with mostly even-keeled projections.
The FBI has reportedly raided the home of its 26-year-old chief exec, Shayne Coplan, and seized his phone. Coplan was not arrested, and appeared to be relatively unphased by the event.
On X, he wrote, “New phone, who dis?”
Read more: Trump discovered he was winning via Polymarket, says CEO
Polymarket’s CEO also suggested that the probe was a “last-ditch effort” by the outgoing administration to “go after the companies they deem to be associated with political opponents.”
“We are deeply committed to being non-partisan, and today is no different,” Coplan continued, “but the incumbents should do some self-reflecting and recognize that taking a more pro-business, pro-startup approach may be what would have changed their fate this election,” (via The Guardian).
Polymarket previously settled with the Commodity Futures Trading Commission (CFTC), agreeing to block US users and pay a $1.4 million penalty.
Meanwhile, reports of wash-trading and market manipulation have been recently published by Fortune.
In a leaked email by an unidentified X user, a Kalshi growth executive has also allegedly tipped an unidentified journalist of wash-trading and money laundering at Polymarket.
“Many accounts on Polymarket exhibit classic wash trading behavior,” the email reads. “Much of this wash trading is blatantly obvious.”
The executive’s account has since gone private.
Protos has not independently verified the email or its contents. However, its contents suggest a simple attempt to further discredit Polymarket amid growing scrutiny, and does not present new or damning evidence.
