Polymarket Accused of Ignoring Fraud in Pursuit of Growth

The prediction market sector is quickly growing, and marquee player Polymarket along with it.

But as The Wall Street Journal (WSJ) reported Sunday (Sept. 20), the company has struggled with compliance failures, legal challenges and software issues as it tries to boost that growth.

The report, which cited interviews with current and former Polymarket employees and investors, points to one example in which a company processing debit-card transactions for Polymarket’s U.S. betting platform revealed it had uncovered a $10 million attempted fraud scheme.

The company was rejecting 80% of transactions as fraudulent, well above the industry standard of 1%, the report added.

The Commodity Futures Trading Commission is investigating the company and Polymarket employees have been told to hold onto records related to the fraud attack and other matters, according to sources familiar with the matter.

Polymarket’s compliance team brought the issue to CEO Shayne Coplan, sources familiar with the events told WSJ, and were shocked by his response: Keep growing and pay a fine if regulators ever discover the truth.

Current and former employees said the CEO’s reaction was in keeping with his goal Polymarket — growth at all costs.

Former financial regulators interviewed by WSJ said the level of attempted fraud and Polymarket’s response was unusual for the commodities and gambling industries.

“In the regulated space, this kind of thing does not happen,” said former CFTC enforcement lawyer Joe Konizeski. “You have adults who handle customer funds and make sure they’re sourced appropriately and handled appropriately.”

A Polymarket spokesman said the platform is committed to maintaining accurate, fair and transparent markets and cooperating with regulators and law enforcement.

“Our market integrity framework includes processes to detect, review and respond to suspicious activity,” the spokesman said.

And a source familiar with the company’s operations told WSJ that Polymarket has been improving its compliance protocols and product testing. The platform has hired Shauna Batista, a former FBI agent, to head its investigation team.

This is happening as Polymarket is contending with a host of legal challenges. In addition to the CFTC investigation, New York City is investigating its advertising practices, and more than a dozen states are probing whether Polymarket and its prediction market rivals like Kalshi and Coinbase are operating unlicensed gambling platforms.