CFTC Reopens Polymarket Probe Over 2022 Settlement Compliance

The Commodity Futures Trading Commission is investigating whether Polymarket violated its January 2022 enforcement settlement by allowing American users to keep trading, Reuters reported on October 27, citing unnamed sources. The inquiry revives a probe the agency closed in 2025 without filing charges, and it lands as the prediction-market operator scales toward institutional backing.

Polymarket settled with the CFTC in January 2022, paying a $1.4 million penalty for offering event-based binary options without registering with the agency. Under the settlement, the company agreed to block US users from its offshore exchange. Geofencing tools followed, but regulators and critics have long pointed to traders who reach the site through VPNs.

What are investigators examining?

According to Reuters' sources, the reopened inquiry covers three areas:

• The adequacy of Polymarket's location controls on the offshore exchange.
• The company's advertising inside the United States.
• The onboarding and customer protections on its US platform, which launched late last year.

Polymarket is headquartered in New York and operates its offshore exchange through a Panama-registered entity. An investigation is an inquiry, not a finding, and many probes end without enforcement action.

How does this fit the wider scrutiny?

The reopened inquiry sits inside a broader pattern. In June, the Wall Street Journal reported that Polymarket had paid individuals to produce videos of fictitious winning bets. Senators Adam Schiff and John Curtis responded by urging the CFTC to open a probe. Bloomberg Law separately reported that investigators were examining the company's social media activity.

CFTC Chairman Michael Selig has framed prediction markets as tools for hedging and information discovery, arguing that federal regulators rather than states should oversee them. Enforcement director David Miller has pledged tough policing of the sector.

The enforcement posture already has a test case. In April, federal prosecutors charged a US soldier, Gannon Ken Van Dyke, with making $400,000 from insider bets placed on the offshore platform. The indictment says he used a VPN and an "exit mode" that made his location appear to sit in a foreign country. Van Dyke has denied the charges, and Polymarket says it referred the matter to authorities.

Why does scale raise the stakes?

Polymarket's footprint has grown faster than its compliance record can settle. Intercontinental Exchange, the parent of the New York Stock Exchange, agreed in October 2025 to invest roughly $2 billion in the platform. Bloomberg counted founder Shayne Coplan, 27, among the youngest self-made billionaires. The bigger the platform, the more its geographic walls matter to regulators.

Market-integrity questions compound the geographic ones. Earlier this year, a study found that a small group of traders exploited Polymarket's five-minute Bitcoin up/down contract by pushing Binance's price in the final seconds before each close. Just 821 wallets — about one in 300 traders — extracted $8.2 million during the pushed cycles, and 93% of those losses fell on retail bettors.

The study's authors found no manipulation in the fifteen-minute contract, because a longer window dilutes a fixed push. That distinction now carries regulatory weight: Nasdaq and Cboe have filed to list similar binary contracts on equity indices, meaning the same design flaw could migrate into US equities venues if left unaddressed.

For Polymarket, the reopened probe sets a concrete clock. If the CFTC finds the 2022 settlement was breached, the company faces a second penalty and potentially stricter oversight of its US platform just as federal and state regulators fight over who governs prediction markets.