FBI Open The Door! The popular Polymarket faces a regulatory raid

Author: Azuma, Odaily Planet Daily

When the FBI Comes Knocking

The New York Post reported today that sources revealed Polymarket founder Shayne Coplan experienced a raid by the Federal Bureau of Investigation (FBI) at his home in New York's Soho district ------ around 6:00 AM local time, Coplan was awakened at home, and FBI agents requested he hand over his phone and electronic devices, but did not arrest Coplan.

Bloomberg followed up with a report stating that the raid was prompted by the U.S. Department of Justice (DOJ) investigating Polymarket, accusing the platform of violating an agreement made with the Commodity Futures Trading Commission (CFTC) in 2022 to "prevent U.S. users from accessing" the platform while still accepting trades from U.S. users.

After the incident, Coplan himself posted two updates on X, the first joking about needing a new phone… The second was a direct response stating: "It’s frustrating that the current administration would make a last-ditch effort to go after companies they believe are associated with political opponents. We are firmly committed to a nonpartisan stance, and today is no exception, but the current administration should engage in some self-reflection and realize that taking a more business-friendly and entrepreneurial approach could change the fate of their election. Polymarket has provided value to tens of millions during this election cycle without harming anyone. We are proud of this. I can say with my head held high that the future of America, especially the future of American entrepreneurship, has never been brighter. In the face of adversity, we will continue to build."

The U.S. Election and the Rise of Polymarket

Polymarket has become one of the most prominent applications in the cryptocurrency industry during this cycle ------ it could even be said to be unparalleled.

With a series of prediction markets centered around the theme of the U.S. election, Polymarket achieved rapid growth in 2024. Around April of this year, the platform's monthly trading volume was only about $40 million, but by October, it had skyrocketed to $2.5 billion. During the election period, Polymarket experienced a surge in traffic, with the total trading volume related to the 2024 U.S. presidential election exceeding $3.6 billion.

In addition, Polymarket has disrupted traditional media in terms of source value ------ while mainstream media like CNN reported that Harris was leading in polls, the probability of Trump winning on Polymarket consistently remained ahead.

After Trump’s eventual victory, Polymarket also declared its success on its official X account: "Polymarket has proven that prediction markets are wiser than polls, media, and experts. Polymarket has consistently and accurately predicted outcomes, far ahead of these three, showcasing the power of high-capacity, high-liquidity prediction markets like those pioneered by Polymarket…"

The "Charges" Point to Allowing U.S. Users Access, but Is That Really the Case?

From media reports, the DOJ's accusation against Polymarket is that the platform continues to accept trades from U.S. users, which violates the agreement Polymarket reached with the CFTC in 2021.

In January 2022, the CFTC reached a settlement with Polymarket regarding "offering event-based binary options products," with Polymarket agreeing to pay a civil penalty of $1.4 million for operating in the U.S. without registration. As part of the settlement agreement, Polymarket promised to gradually cease operations in the U.S. while continuing to operate abroad.

However, although U.S. users have technically not been allowed to bet on Polymarket since then, the platform still has a significant number of users from the U.S. ------ Forbes reported in August that Similarweb data showed that 25% of the traffic to the Polymarket website still came from the U.S.

In fact, the CFTC has consistently opposed whether platforms like Polymarket can offer election-related prediction markets. Besides Polymarket, two other well-known non-cryptocurrency prediction platforms, PredictIt and Kalshi, are also in disputes with the CFTC on this issue.

However, the industry generally does not believe that the DOJ's investigation into Polymarket is genuinely related to this matter ------ as Coplan emphasized that this may be politically motivated, the New York Post also quoted a source in its original report: "The current administration is likely trying to accuse Polymarket of manipulating the market and polls to support Trump."

Community Reaction

After the investigation was exposed this morning, various sectors of society began to show support for Coplan.

Elon Musk directly replied under Coplan's second post: "Indeed"; Coinbase CEO Brian Armstrong more directly criticized the investigation, believing that the DOJ's actions were entirely politically motivated, but this would only serve to strengthen Polymarket's influence.

Additionally, the meme community quickly reacted to the incident, with a meme token themed "Free Coplan," named FREE Shayne Coplan (token symbol is an "Eagle"), seeing its market cap surge to $30 million.

But the problem is that Coplan was not arrested; he just had his phone confiscated, and he is still FREE… (perhaps this is part of the meme).

To all the meme warriors gearing up for battle, please make sure to do your research and manage your risks before taking action.