Polymarket, the decentralized prediction market based in New York, has been the subject of investigations by the United States Commodity Futures Trading Commission (CFTC).
According to an October 23 report from Bloomberg citing anonymous sources, the CFTC is investigating whether Polymarket is allowing its clients to trade binary options and swaps that should be registered with the financial regulator. The CFTC has yet to confirm 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 that will assist them with any inquiries."
The report states that the company has hired the former director of the CFTC's compliance division and current partner at the law firm Sullivan & Cromwell, James McDonald, to board the probe.
Polymarket hosts a variety of predictive news markets that allow users to speculate on the outcome of future events using the USD Coin stable token. Polymarket does not take positions against its customers and hosts the smart contract interface that allows users to interact with the protocol.
The report claims the investigation comes as Polymarket is in talks to secure a new round of funding, with unnamed sources claiming the increase could see the firm value itself at close to $ 1 billion.
In October 2020, Polymarket secured a $ 4 million funding round led by Polychain Capital that also featured participation from CoinShares CSO Meltem demirors, former Coinbase CTO Balaji Srinivasan, and AngelList CEO Naval Ravikant.
Related: Crypto in crosshairs: US regulators eye cryptocurrency sector
Polymarket isn't the only one offering decentralized prediction markets, as Augur launched a Polygon implementation of its platform 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 Prospects, Augur markets are currently focused on sporting events and cryptocurrency price forecasts.
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