The US Futures Trading Commission (CFTC) has charged the creators of the Polymarket prediction market with servicing over-the-counter binary options trading without the necessary registration.
Polymarket allows users to place bets on the outcome of various events using blockchain. On its own website, the project is positioned as a "decentralized information market platform":
"Polymarket works exclusively for informational and educational purposes. We do not accept money or cryptocurrency for storage and do not organize markets ourselves. Polymarket displays existing markets on the Ethereum blockchain and is a graphical interface."
The CFTC, however, stated that "all derivative markets must operate within the law, regardless of the technology used, in particular representatives of the so-called decentralized finance space."
"It was found that Polymarket has offered more than 900 separate event markets since its foundation, placing smart contracts on the blockchain to manage them. Polymarket creates, defines, supports and carries out trading and execution of binary options contracts on its website," the CFTC writes.
According to the order of the regulator, the platform must pay a $1.4 million fine, as well as close all markets operating in violation of the law. The agency noted that the project cooperated with the investigation, as a result of which it received a reduced fine.
Bloomberg reported on the ongoing CFTC investigation into Polymarket in October.