IMG-LOGO

CFTC Fines ‘Decentralized’ Prediction Market Platform Polymarket $1.4 Million, Shuts Down Noncompliant Markets

News Feed - 2022-01-04 10:01:45

CFTC Fines "Decentralized" Prediction Market Platform Polymarket $1.4 Million, Shuts Down Noncompliant Markets


The U.S. Commodity Futures Trading Commission (CFTC) has ordered a “decentralized” prediction market platform to shut down non-compliant markets and pay a fine of $1.4 million. “Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as ‘event markets,"” said the derivatives regulator. CFTC Takes First Crypto Enforcement Action of the Year


The Commodity Futures Trading Commission (CFTC) has taken the first crypto enforcement action of the year in the U.S. The derivatives regulator announced that it entered an order Monday “filing and simultaneously settling charges against Delaware-registered Blockratize, Inc. d/b/a Polymarket.”


The company was charged “for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF),” the CFTC wrote. The regulator detailed: The order requires that Polymarket pay a $1.4 million civil monetary penalty, facilitate the resolution (i.e. wind down) of all markets displayed on Polymarket.com that do not comply with the Commodity Exchange Act (CEA) and applicable CFTC regulations.


The New York city-based company must also “cease and desist from violating the CEA and CFTC regulations, as charged.”


According to the order, “By January 14, 2022, [the] respondent shall cease offering access to trading in markets displayed on Polymarket.com” unless they comply with the CFTC’s rules.


Polymarket describes itself as “a decentralized information markets platform, harnessing the power of free markets to demystify the real-world events that matter most to you.” It advertises that users can “bet” on their beliefs about the outcome of real-world events.


The site lists a number of markets that users can bet on, such as “What percent of US Covid-19 cases will be from the Omicron variant on January 1, 2022?” and “Will annual inflation in the European Union be 5.4% or more in December?”


However, its website notes: “The markets listed here are for informational purposes only. We take no profits from them.”


According to the derivatives watchdog, “Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as ‘event markets"” since approximately the beginning of June 2020.


Noting that the platform “has offered more than 900 separate event markets since its inception while deploying smart contracts hosted on a blockchain to operate the markets,” the regulator described: Polymarket creates, defines, hosts, and resolves the trading and execution of contracts for the event-based binary option markets offered on its website.


The CFTC explained that “Polymarket’s markets cover a large variety of binary options, including cryptocurrency [and] digital assets, current events, and financial conditions, among other events.”


The regulator emphasized that event market contracts offered on the Polymarket platform “constitute swaps under the CFTC’s jurisdiction, and therefore can only be offered on a registered exchange in accordance with the CEA and CFTC regulations.” The platform’s civil monetary penalty has been reduced due to its “substantial cooperation with the Division of Enforcement’s investigation of this matter,” the CFTC noted.


Following the CFTC’s announcement, Polymarket issued a statement, explaining: We are pleased to confirm that we have successfully agreed to a settlement with the CFTC … the three markets set to resolve after January 14, 2022 that do not comply with the Act will be prematurely wound down and participants refunded. Tags in this story Betting, binary options, CFTC, crypto enforcement action, decentralized finance, decentralized platform, DeFi, enforcement action, Prediction Market, Prediction markets


What do you think about the CFTC’s action against this prediction marketplace? Let us know in the comments section below. Kevin Helms


A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Billionaire Ray Dalio Insists Governments Could Outlaw Bitcoin REGULATION | 1 day ago India"s Central Bank RBI Says Crypto Is Prone to Fraud and Poses Immediate Risks to Consumer Protection REGULATION | 2 days ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleTurkey’s Inflation Jumps to 36%, Lira’s Value Plummets, Citizens Flock to Stablecoins Next articleRetail Giant H&M Debunks Rumor of Store Opening in Metaverse, Collaboration With Ceek Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItHP-Branded Servers Hijacked to Mine $110,000 Worth of Cryptocurrency


Hackers recently took control of a group of HP-branded servers and used them to remotely mine a cryptocurrency called raptoreum, according to reports. This resulted in the compromised cluster of HP machines becoming the biggest contributor to the total mining ... read more.Crypto Exchange Binance Receives Approval in Bahrain — Plans to Become Regulated, Centralized Worldwide Billionaire Ray Dalio Sees Limitation on Bitcoin"s Price, Doubts BTC Can Reach $1 Million This Year"s Top 10 Crypto Asset Gainers Outshined BTC"s and ETH"s 12-Month Returns India"s Swadeshi Jagran Manch Calls for Outright Ban on Cryptocurrency