Polymarket, a New York-based crypto prediction platform, has successfully reached a settlement agreement with the Commodity Futures Trading Commission (CFTC) to pay a fine of $ 1.4 million.
Founded in 2018, Polymarket is a decentralized platform that allows users to bet outcomes of events, such as pro-sports games and politics, through binary options contracts.
In a January 3 announcement, the CFTC confirmed that it has successfully settled charges against Polymarket. The commission alleged that the crypto prediction platform has operated illegally unregistered or non-designated facility since 2020.
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.
As per the order, the 3 markets lasting past 1/14 that don't comply with the Act will be prematurely resolved. More soon
— Polymarket (@PolymarketHQ) January 3, 2022
According to CFTC monetary laws, Polymarket, which was found guilty, is now required to pay a fine of $1.4 million along with getting rid of any markets that do not align with CFTC and Commodity Exchange Act (CEA) regulations.
While commenting about the successful settlements, Polymarket responded in a January 4 tweet that they were “excited to move forward.”
On the other hand, the CFTC insisted that all event markets backed by binary options “constitute swaps” and will remain under its jurisdiction. In that context, all platforms offering exposure to these markets must operate under the CFTC and CEA.
In an announcement, Vincent McGonagle, the CFTC’s acting director of enforcement, appealed all derivatives platforms to register with the commission, highlighting those operating within the decentralized finance (DeFi) sector:
“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.”
Before summarizing, the CFTC noted that Polymarket was accorded with a reduced civil monetary penalty because of its cooperation during the investigation period.
The CFTC began its thorough investigations into Polymarket in October 2021, with the commission hiring now-former enforcement head James McDonald to handle the probe.