The home of Polymarket CEO Shayne Coplan has been raided by federal agents, resulting in the seizure of his electronic devices, although no arrests or charges have been announced at this time.
The Department of Justice is investigating Polymarket for potentially allowing US users to access its platform, in violation of a previous agreement with the CFTC that required blocking US residents.
Polymarket has denounced the intervention as a ‘political retaliation’, while the CFTC insists on strict compliance with regulations, highlighting the challenges that new technologies and decentralization pose to regulatory authorities.
The US government targets Polymarket CEO
The home of Polymarket CEO, Shayne Coplan, was raided by federal agents on Wednesday, an event that quickly garnered attention in the crypto sphere and prediction markets. The raid, confirmed by a Polymarket spokesperson, was reported by the New York Post and Axios, and led to the seizure of his phone and other electronic devices. However, no arrests or formal charges have been announced at this time.
This legal action comes in an already tense climate, as Polymarket made waves as an innovative platform during the US presidential elections, with billions of dollars at stake. The market accurately predicted Donald Trump’s victory in 2024, enhancing its reputation and visibility.
The suspicions of the Department of Justice
According to a Bloomberg report, the Department of Justice (DOJ) is investigating Polymarket for allegedly allowing US users to access its platform, in violation of a previous agreement with the Commodity Futures Trading Commission (CFTC). In 2022, Polymarket entered into an agreement with the CFTC, stating that it must block access to US residents. Despite this obligation, the reality is different.
It is well known that US users bypass the ban using VPNs, which mask their real location. This access control loophole complicates the enforcement of regulations and raises questions about the platform’s compliance measures’ viability.
Polymarket’s reaction: accusations and defiance
Polymarket CEO has denounced this intervention as an ‘obvious political retaliation’ by the outgoing administration, arguing that the platform was merely fulfilling its mission of transparency and informing citizens about important events, including elections.
Polymarket is a fully transparent prediction market that helps people better understand the events most relevant to them.
The CFTC, on the other hand, has reiterated that the company must strictly abide by the terms of its agreement. ‘This means it cannot accept customers living in the United States or individuals considered US citizens,’ said a CFTC spokesperson, emphasizing that the ban is unambiguous.
The dilemma of regulations in the face of new technologies
This case highlights the challenge that new technologies and decentralization pose for regulators. Despite Polymarket’s efforts to comply with regulations, the use of VPNs by US users complicates the enforcement of the ban. As lawyer Aaron Brogan pointed out, while these markets should theoretically limit their access, reality shows that technical barriers are not enough to prevent them from operating seamlessly between regulated and unregulated platforms.
