Singapore and CFTC zero in on Polymarket as wildfire bets fuel public outcry

How did a crypto betting platform become a global controversy, drawing fire from Singapore and the FBI and outraged users?

Polymarket’s mounting troubles

Singapore shines as a leading hub for technology and innovation. Yet, when it comes to gambling, the city-state adopts a notably conservative approach.

This dichotomy recently came to light on Jan. 12, when Polymarket, a well-known crypto-based prediction market, clashed with Singapore’s stringent gambling laws.

Polymarket offers a platform where users can use crypto, particularly USDC (USDC) to place bets on real-world events, from election outcomes to crypto price fluctuations. While some see it as a form of speculative fun, Singaporean authorities have officially classified it as a gambling site.

When Singaporeans tried to access Polymarket, they were confronted with a severe warning under Section 20 of the Gambling Control Act 2022. This act forms a key part of Singapore’s strict regulatory framework, explicitly banning gambling through unlicensed operators.

Those found in violation of this law could face severe penalties, including fines up to 10,000 Singapore dollars, six months in jail, or both. The only legal betting option in Singapore is through Singapore Pools, the state’s officially sanctioned gambling operator.

Alex Zuo, vice president at Cobo Global, a digital asset custody provider, highlighted the severity of the situation in a social media post.

“Polymarket is officially defined as a gambling website in Singapore. If you want to place a bet, you can only go to a state-owned gambling company. Otherwise, you will face fines and imprisonment.”

This isn’t the first time Polymarket has found itself under scrutiny. What’s behind this growing attention, and why is the platform in the spotlight for all the wrong reasons? Let’s dive deeper into the unfolding story and its implications.

Betting on tragedy sparks outrage

As Los Angeles battles one of its most devastating wildfire seasons, the unfolding disaster has become a grim backdrop for Polymarket’s latest controversy.

The Palisades wildfire, the most destructive blaze in Los Angeles history, has consumed over 23,000 acres, destroyed thousands of homes, and taken at least 24 lives.

The devastation has left Angelenos grappling with existential questions. For Polymarket, however, these deeply personal concerns have morphed into betting opportunities, offering markets like “When will the Palisades wildfire be fully contained?” and “How many acres will the Palisades wildfire burn in total?”

This has led to a wave of public outrage, with many accusing Polymarket of profiting off human suffering.

One angered user said, “I do not understand how people can support Polymarket for these betting markets on the wildfires. Just so gross to make this tragedy a way to make money.”

Another infuriated user added, “Prediction markets straightforwardly incentivize antisocial behaviors. You’re setting a public and liquid price reward mechanism for terrorism.”

Concerns have also been raised about the potential for these markets to encourage harmful actions, such as arson. As one user pointed out, “This is incentivizing people to commit arson. I don’t see a counterargument.”

Polymarket, far from shying away from the controversy, appeared to double down. A tweet from their official X account attempted to inject politics into the discourse, referencing Los Angeles Mayor Karen Bass and her absence during the crisis.

However, not everyone sees Polymarket’s wildfire contests in the same light. Some within the crypto community have defended the platform, drawing parallels to insurance companies, which also profit from disasters.

“Is it really so different?” one supporter countered, pointing out that insurance payouts, like prediction markets, ultimately revolve around financial incentives tied to crises.

The user further argued that most bets were structured to reward outcomes like containment rather than destruction, stating, “The payouts heavily favor stopping fires rather than spreading them.”

Still, this defence has done little to sway public opinion. The broader consensus remains that Polymarket crossed an ethical line by creating and advertising these wildfire-related contests, particularly during an ongoing tragedy that has claimed lives and displaced tens of thousands.

FBI and CFTC’s tag-team scrutiny

Beyond the recent public uproar, Polymarket’s journey has been anything but smooth. Since its founding in 2020, the platform has consistently tested the boundaries of what’s legally permissible in the prediction market space.

The story took a sharp turn when Coinbase, one of the largest crypto exchanges in the world, reportedly disclosed that it had received a subpoena from the Commodity Futures Trading Commission.

The subpoena, issued directly to Polymarket and shared on social media on Jan. 9, demands general customer information related to the platform’s activities.

While Coinbase assured its users that no immediate action was required on their part, it also made it clear that it might have to comply with the CFTC’s demand unless a legal intervention was made before Jan. 15.

For those following Polymarket’s journey, this isn’t entirely unexpected. The platform had already faced a $1.4 million settlement with the CFTC back in 2022 for operating an unregistered facility offering event-based binary options.

The reported CFTC subpoena to Coinbase comes following the FBI’s mid-November raid on the home of Polymarket CEO Shayne Coplan.

On the morning of November 13, 2024, federal agents stormed the Manhattan residence of Polymarket CEO Shayne Coplan in what many have described as a highly charged operation.

According to reports, Coplan, 26 years old, was awoken at 6 a.m. as FBI agents executed a search warrant, demanding access to his phone and other electronic devices.

The raid occurred less than a week after Donald Trump’s victory in the U.S. presidential election—a result that Polymarket had controversially predicted with strong odds in Trump’s favor, even as most traditional polls showed a tight race.

Coplan himself didn’t hold back, taking to X to accuse the outgoing Biden administration of launching a politically motivated attack. In his words, it was a “last-ditch effort” to target companies perceived as being aligned with political opponents.

Even Elon Musk, now poised to co-lead a Department of Government Efficiency under Trump’s incoming administration, chimed in, stating, “This seems messed up.”

The connection between the FBI raid and the subsequent CFTC subpoena targeting Coinbase reveals a coordinated regulatory effort to scrutinize Polymarket’s operations.

From peak to trough and the road ahead

Polymarket’s journey has been a tale of explosive growth, relentless controversy, and a steady grip on the crypto prediction market.

What began as a budding prediction market with monthly revenues of a few million dollars by mid-2024 soon transformed into a powerhouse fueled by the frenzy of the U.S. elections.

According to Dune Analytics, in June 2024, the platform generated $111 million in monthly volume. By July, this number had more than tripled to $387 million.

As the election season hit its peak, so did Polymarket. In October, volumes soared to a staggering $2.5 billion, a fivefold increase from September’s $500 million. November shattered all previous records, with the platform clocking $2.62 billion in trading volume — the highest in its history.

Moreover, Polymarket’s cumulative trading volume had surged past $4 billion in 2024, earning it mentions on Bloomberg, CNN, and CNBC — a rare feat for a crypto-driven platform.

However, the end of the election season brought a reality check. Trading volumes dropped significantly, with December seeing $1.92 billion — a notable decline from the November high.

The downtrend has continued into January, where volumes have barely crossed $500 million midway through the month. At this pace, Polymarket may end January at around $1 billion, representing a 50% dip from December.

While these numbers are still robust compared to its pre-election days, they highlight the platform’s reliance on major events to sustain its explosive growth.

For now, Polymarket remains under intense public and governmental scrutiny, with many wondering how far the platform is willing to push the limits of its controversial model.