Polymarket, the cryptocurrency-based prediction market, has just been pinned down by the authorities of the Commodity Futures Trading Commission (CFTC). The latter accuse him of having offered binary options contracts without being officially authorized. As a result, the website will have to pay a fine of $ 1.4 million for its violation. Details below.
Failure to register which exposes investors
Polymarket allows its users to make simple yes or no bets with cryptocurrencies on a number of different topics. These include whether annual inflation in the United States will be 7% or more in December 2021 or whether Donald Trump will be the Republican presidential candidate in 2024. According to the CFTC, all of these event-driven binary option contracts have been issued without Polymarket having obtained the designation as a designated contract market (DCM). In other words, the website would have allowed its users to place bets without being registered.
CFTC Acting Director of Law Enforcement Vincent McGonagle said this registration was essential to guarantee the protection of investors. “All derivatives markets must operate within the limits of the law, regardless of the technology used, and in particular including those in the space known as decentralized finance or DeFi. Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent, and offer clients the protection provided by our regulations.“, He clarified.
An offense that has lasted since June 2020
According to the CFTC’s investigations, Polymarket had been illegally offering binary options based on events since June 2020. The regulator also specifies that the prediction site had offered 900 different event markets since its launch and that binary options constitute swaps under the jurisdiction of the CFTC. These can then only be offered on a registered stock exchange., which is not the case with Polymarket. The latter is now asked to stop offering access to the incriminated markets by January 14 and to pay $ 1.4 million in fines to the CFTC.
Polymarket is doing quite well given the facts with which it is accused in this case. The CFTC has indeed distinguished itself in the past by attacking cryptosphere companies that do not comply with US regulations. Tether had also paid the price last October by being fined $ 41 million from the regulator.
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Luc Jose Adjinacou
Far from having dampened my enthusiasm, an unsuccessful investment in 2017 in some crypto only increased my enthusiasm. I therefore resolved to study and understand blockchain and its many uses and to relay information relating to this ecosystem with my pen.