Polymarket is facing scrutiny over compliance and operational failures as it prioritizes rapid expansion. Reports indicate that a payment processor identified a $10 million fraud attempt on the platform. The company reportedly rejected 80% of transactions as fraudulent, significantly exceeding the industry standard of 1%.
The Commodity Futures Trading Commission is currently investigating the firm, and employees have been instructed to preserve records related to these incidents. Sources claim that CEO Shayne Coplan was aware of the compliance issues but instructed the team to continue growth and prepare to pay potential regulatory fines.
The platform is also under investigation by New York City regarding its advertising practices. Additionally, over a dozen states are examining whether Polymarket and competitors like Kalshi and Coinbase operate as unlicensed gambling platforms.
In response to the allegations, a company spokesperson stated that Polymarket is committed to market integrity and cooperation with law enforcement. The firm has recently hired former FBI agent Shauna Batista to lead its internal investigation team and is working to improve compliance protocols.
