The decentralized prediction market New York-based Polymarket has been the subject of investigations by the US Commodity Futures Trading Commission (CFTC).
According to an Oct. 23 Bloomberg report citing anonymous sources, the CFTC is investigating whether Polymarket allows its clients to trade binary options and swaps that should be registered with the financial regulator. The CFTC has not yet confirmed whether it is investigating Polymarket.
A spokesperson for the platform stated: “Polymarket is firmly committed to complying with applicable laws and regulations and providing information to regulators to assist them in any investigation.”
The report states that The company has hired former CFTC Enforcement Division Director and current partner at the Sullivan & Cromwell law firm, James McDonald, to conduct the investigation.
Polymarket hosts a variety of novel predictive markets that allow users to speculate on the outcome of future events using the stable token USD Coin.. Polymarket does not take positions against its clients and hosts the smart contract interface that allows users to interact with the protocol.
The report states that The investigation comes as Polymarket is in talks to secure a new round of funding, and anonymous sources say the increase could lead the firm to a valuation close to $ 1 billion.
In October 2020, Polymarket secured a $ 4 million funding round led by Polychain Capital, which also featured CoinShares CSO Meltem Demirors, former Coinbase CTO Balaji Srinivasan, and AngelList CEO Naval Ravikant.
Polymarket is not the only company offering decentralized prediction markets; Augur launched an implementation of its platform on Polygon in early October.
While Polymarket offers an eclectic range of markets including speculation on covid case numbers, CryptoPunks floor prices, and Donald Trump’s presidential outlook, Augur markets are currently focused on sporting events and cryptocurrency price forecasting.
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