- Polymarket, an event-betting platform, has been fined $1.4 million and ordered to “wind down” markets for breaking CFTC rules.
- Shortly later, the Commission levied a $1.25 million civil monetary penalty against the trading platform Kraken.
- Consequently, in October, the CFTC ordered Tether and Bitfinex to pay a total of $42.5 million for breaking the law.
Polymarket, an event-betting platform, has been fined $1.4 million and ordered to “wind down” markets for breaking CFTC rules. Polymarket, a decentralized platform that lets users gamble on the outcome of current events, has been fined $1.4 million by the Commodity Futures Trading Commission (CFTC). According to the government, the company did not apply for a Designated Contract Market (DCM) or Swap Execution Facility (SEF) registration.
The CFTC is on the prowl once more.
Polymarket must also “wind down” all markets featured on its website that do not conform with the Commodity Exchange Act (CEA) and CFTC standards, according to the government agency’s notification.
Acting Director of Enforcement Vincent McGonagle stated that all derivatives markets must comply with existing legislation requirements regardless of the technology used. However, those in the DeFi space, according to the CEO, should be examined much more closely.
“Market participants should interact with the CFTC proactively to ensure that our markets remain healthy, transparent, and provide customers with the protections afforded by the CEA and our laws,” McGonagle continued.
Charges Led by the CFTC in the Past
Polymarket isn’t the first crypto-related business to get a CFTC fine. For example, Bitmex, a digital asset exchange, agreed to pay $100 million to the federal agency accusing it of evading US regulations in August of last year. The CFTC specifically accused the firm of operating an unlicensed derivatives marketplace.
Shortly later, the Commission levied a $1.25 million civil monetary penalty against the trading platform Kraken. It stated that the latter allowed US customers to access products otherwise unavailable to them.
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Consequently, in October, the CFTC ordered Tether and Bitfinex to pay a total of $42.5 million for breaking the law. The organizations were also told to refrain from violating the CEA.
Polymarket is a cryptocurrency betting platform that allows users to choose between at least two possibilities on certain transactions, such as who will win the 2020 presidential election. Polymarket offered at least 900 such markets during the last 18 months, according to the CFTC ruling.
Under federal law, these marketplaces are swaps
According to the CFTC’s news statement, Polymarket cooperated with the inquiry, resulting in lower penalties. According to the order, the business will stop offering markets on January 14 and pledge to make all funds available to users by January 24. Polymarket will likewise stop violating the CEA in the future, while it does not appear that the company will be shut down.
Bloomberg reported in October that Polymarket was under strict surveillance. In June 2021, however, now-retired CFTC Commissioner Dan Berkovitz stated that decentralized finance (DeFi) markets for derivatives would fall within his agency’s jurisdiction. “Digital currencies, blockchains, and smart contracts are not exempt from registration under the CEA,” he stated. As a result, Polymarket said in a statement supplied by an external representative that it would close three markets and issue refunds to users before the January 14 deadline. The organization intends to provide additional details about its ambitions in the future.
Avoid Unregistered Binary Options Trading Platforms, according to the CFTC
Avoid Unregistered Binary Options Trading Platforms, and Beware of Off-Exchange Binary Options Trades are two CFTC customer advisory protection warnings that inform clients that there are registered binary options exchanges in the United States. The CFTC strongly advises the public to check a company’s registration with the CFTC before making a financial commitment. The CFTC or the US Securities Exchange Commission enforce certain regulatory criteria for liquidity, safety, and client protection, and the exchange must be registered to do so. Accordingly, customers should be mindful of giving funds to an entity that is not registered.