Coinbase CEO Brian Armstrong has voiced strong criticism of the U.S. Department of Justice’s (DOJ) ongoing investigation into Polymarket, a cryptocurrency-based prediction market platform. In a recent post on X (formerly Twitter), Armstrong suggested that the DOJ’s probe was politically motivated and warned that it could inadvertently enhance Polymarket’s influence, particularly amid a surge in election-related trades.
The DOJ’s investigation intensified after an FBI raid on Polymarket CEO Shayne Coplan’s devices, as authorities allege that the platform violated the terms of its 2022 settlement with the Commodity Futures Trading Commission (CFTC). The settlement, which came with a $1.4 million penalty, limited Polymarket’s access to U.S.-based users. However, new findings suggest that U.S. residents may still be using the platform, potentially violating the settlement’s terms.
The investigation follows a significant rise in election-related wagers on Polymarket, particularly those predicting Donald Trump’s re-election. Critics, despite Armstrong’s objections, have raised concerns that such large bets could influence public opinion, prompting regulatory scrutiny. While Polymarket insists that it has implemented measures to prevent U.S. users from participating, the DOJ’s investigation signals ongoing concerns about compliance.
Polymarket Defends Its Operations, Calls Probe Politically Driven
In response to the DOJ’s actions, Polymarket has defended its platform, calling the investigation politically motivated and asserting that it serves as a tool for information gathering, particularly during election cycles. CEO Shayne Coplan described the investigation as a “last-ditch effort” by the current administration to target companies perceived as aligned with political opponents.
“We do not take sides,” Coplan tweeted, emphasizing that Polymarket’s goal is to create an open platform for information and that the company has taken steps to ensure compliance with U.S. regulations. Coplan also called for regulators to focus on fostering a more favorable environment for startups rather than targeting innovative companies like Polymarket.
Since the CFTC settlement, Polymarket has introduced measures to limit access from suspected U.S. users, including location verification protocols. The company insists that it does not encourage illegal activity and has worked to address regulatory concerns in good faith.
Global Scrutiny: France Mulls Ban on Polymarket
Polymarket’s regulatory challenges extend beyond the U.S. In France, the country’s gambling authority, the ANJ, is reportedly considering a ban on the platform, citing concerns over unlicensed gambling services. The French regulator has taken note of the spike in bets placed on U.S. elections, adding another layer of regulatory pressure on Polymarket’s operations.
Despite the growing scrutiny, Polymarket continues to gain support from the cryptocurrency community, with many arguing that the platform is a form of free speech. Solana co-founder Anatoly Yakovenko voiced support for Polymarket, asserting that data markets are a form of “political speech” protected under the First Amendment. This sentiment is shared by several crypto industry leaders who believe that regulating or banning platforms like Polymarket undermines free expression and stifles public discourse on political matters.
As Polymarket navigates regulatory hurdles both in the U.S. and abroad, its future remains uncertain. The ongoing DOJ probe, combined with international pressure, could have significant implications for the platform and its role in the growing world of cryptocurrency-based prediction markets.
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