The US Commodity Futures Trading Commission (CFTC) is investigating a popular Ethereum-based prediction market platform Polymarket. The platform is under scrutiny on the grounds of offering swap trading and binary options, Bloomberg reported Sunday.
The financial regulator is probing whether the platform is offering swap trading and binary options, products that require a license from the CFTC. A Polymarket representative told Bloomberg:
“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry.”
Polymarket has hired lawyer James McDonald, the former head of the CFTC’s enforcement division, to handle the investigation.
Polymarket is a New York-based prediction market platform founded by 23-year-old Shayne Coplan. It allows users to bet on speculative market trends, for instance, the results of the US presidential election in November last year.
Users can place bets via stablecoin USDCoin (USDC) instead of US dollars on the outcome of future events. Users can do so by buying futures contracts that are approved on the Ethereum network.
The prediction platform completed a $4 million funding round last fall led by Polychain Capital. The company has plans to raise fresh funds that could take the company’s valuation to hit nearly $1 billion, according to sources familiar with the matter.