A controversial crypto betting platform's leader faces federal scrutiny following an unprecedented accuracy in presidential election predictions.
According to Business Insider, FBI agents conducted a raid on Polymarket CEO Shayne Coplan's Manhattan residence Wednesday morning, confiscating phones and electronic devices as part of a Department of Justice investigation into potential unauthorized U.S.-based trading activities.
The raid comes amid heightened attention on Polymarket's recent success in predicting Donald Trump's election victory, where traders on the platform showed strong conviction in a Trump win while traditional polls suggested a closer race. One particularly successful trader from France reportedly secured an $85 million windfall from the election outcome.
Polymarket's legal challenges stem from a previous agreement with the Commodity Futures Trading Commission in early 2022, where the company paid a $1.4 million penalty and committed to blocking U.S.-based trades. However, reports suggest users may have circumvented these restrictions using virtual private networks.
The 26-year-old CEO responded to the raid with characteristic defiance on social media platform X, posting, "New phone, who dis?" Shortly after, Coplan escalated his response with direct criticism of the current administration.
Coplan posted on X following the raid:
Make no mistake, Polymarket single-handedly called the election before anything else.
Founded in 2020, Polymarket has experienced remarkable growth, securing $70 million in funding from prominent investors, including Peter Thiel's Founders Fund and Ethereum cofounder Vitalik Buterin. The platform's ability to predict election outcomes has garnered significant attention.
The company's popularity surged during the recent election, becoming one of the most downloaded free applications on Apple's App Store during Election Day. Despite its success, Polymarket faces regulatory scrutiny not only in the United States but also in France.
The platform's spokesperson defended their operations, stating:
We charge no fees, take no trading positions, and allow observers from around the world to analyze all market data as a public good. We look forward to standing up for ourselves and our community and continuing to help everyday people understand important world events
Coplan maintains that betting markets provide more accurate election predictions than traditional polling methods. His appearance on CNBC's Squawk Box highlighted this stance, where he emphasized the stark contrast between Polymarket's decisive prediction and television coverage suggesting a neck-and-neck race.
The raid has drawn attention from prominent figures, including Elon Musk, who has been appointed to a role in Trump's incoming administration. Musk expressed support for Coplan's criticism of the Biden administration's approach to business innovation.
The company spokesperson characterized the raid as political retribution, suggesting it represents an attempt to target organizations associated with political opponents rather than legitimate regulatory concerns.
The FBI raid on Shayne Coplan's Manhattan residence marks a significant escalation in the ongoing scrutiny of crypto-based prediction markets, particularly following Polymarket's accurate forecast of Donald Trump's election victory. The Department of Justice investigation focuses on whether the platform violated previous agreements by allowing U.S.-based trading activities. The platform's future remains uncertain as it confronts challenges from both U.S. and French regulators while defending its role as a transparent prediction market.
