Polymarket settles with the CFTC for $1.4M and blocks US users

Polymarket/Polymarket exchange

The CFTC found that Polymarket's operator, Blockratize, offered off-exchange event-based binary options without registering as a designated contract market or swap execution facility. It ordered a $1.4M civil penalty and the wind-down of non-compliant markets on Polymarket.com. It was an early case of US regulators applying derivatives rules to a crypto-based prediction market.

• Violation: offered unregistered off-exchange event-based binary options starting June 2020, over 900 separate markets.
• Penalty: $1.4M civil monetary penalty (reduced due to cooperation).
• Orders: wind down non-compliant markets, cease violating Commodity Exchange Act and CFTC rules.
• Significance: early enforcement case applying derivatives regulation to blockchain-based prediction markets.