The New York-based decentralized forecasting market Polymarket has been investigated by the United States Commodity Futures Trading Commission (CFTC).
The CFTC is investigating whether Polymarket will allow its clients to trade binary options and swaps, which should be registered with the financial regulator, according to a report by Bloomberg on Oct. 23, citing anonymous sources. The CFTC has yet to confirm whether it is investigating Polymarket.
A spokesman for the platform stated, “Polymarket is committed to complying with applicable laws and regulations and providing information to regulators to assist with any inquiries.”
The report alleges that the company hired former director of the CFTC’s enforcement department and current partner at Sullivan & Cromwell law firm, James McDonald, to clarify the investigation.
Polymarket hosts a variety of novel prediction markets that allow users to speculate on the outcome of future events using USD Coin’s stable token. Polymarket does not take any positions against its customers and hosts the smart contract interface which allows users to interact with the protocol.
The report claims the investigation is taking place while Polymarket is in talks to secure a new round of funding.
In October 2020, Polymarket secured a $ 4 million funding round led by Polychain Capital, which also included CoinShare’s CSO Meltem Demirors, former Coinbase CTO Balaji Srinivasan and AngelList CEO Naval Ravikant.
Related: Crypto in the crosshairs: US regulators are keeping an eye on the cryptocurrency sector
Polymarket isn’t the only provider of decentralized prediction markets. Augur will start deploying its platform to Polygon at the beginning of October.
While Polymarket has an eclectic range of markets to choose from, including speculation on Covid case numbers, CryptoPunks minimum prices, and Donald Trump’s presidential outlook, the Augur markets are currently focused on sporting events and crypto price predictions.