https://thedefiant.io/cftc-polymarket-action-no-license/
The U.S. Commodity Futures Trading Commission (CFTC) has settled charges against Polymarket, an Ethereum-based prediction markets platform, ordering the firm to pay a $1.4M penalty and remove its unauthorized markets by Jan. 14.
Polymarket hosts binary options contracts that allow users to speculate on whether a particular event may occur in the future. The CFTC found the contracts constitute swaps and said Polymarket was offering the markets without the licensing required by the Commodity Exchange Act.
A Jan. 3 announcement from the CFTC states that Polymarket was sued for “offering off-exchange event-based binary option contracts” without being licensed as a “designated contract market” or “swap execution facility.”
“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” Vincent McGonagle, CFTC Acting Director of Enforcement,, said in a statement. “Market participants should proactively engage with the CFTC.”
The CFTC also noted that Polymarket received a reduced civil monetary penalty due to the company’s “substantial cooperation” with their investigation.
Polymarket acknowledged the charges in a tweet, stating that it will resolve three markets found to violate the act that are scheduled to expire after Jan 14. “We’re pleased to confirm that we’ve successfully agreed to a settlement with the CFTC, & are excited to move forward & focus on the future of Polymarket,” the team said.
The order notes that Polymarket has offered contracts for more than 900 unique events since launching in June 2020.