CFTC Reopens Polymarket Probe Over 2022 Settlement

CFTC Revisits the 2022 Settlement

The Commodity Futures Trading Commission (CFTC) has reopened an investigation into Polymarket, asking whether the prediction market platform kept its side of the 2022 settlement that required it to bar US users from its offshore exchange. Two people familiar with the matter say the agency began the renewed review earlier this year and is examining Polymarket’s user location-verification systems and its advertising activity inside the United States. The inquiry revives a matter the CFTC closed in 2025 without filing charges.

Under the January 2022 settlement with the CFTC, Polymarket paid a $1.4 million civil penalty for offering event-based binary options without registration and committed to block American users from its offshore venue. Geofencing tools followed, but regulators and critics pointed to traders who reached the site through VPNs, and suspicion hardened during the 2024 US presidential election, when election markets on the platform surged. Polymarket prohibits VPN-based circumvention and says it operates monitoring systems designed to keep restricted users out. Investigators are also reviewing the onboarding process and customer protections on the company’s US platform, which launched late last year after Polymarket acquired a CFTC-designated derivatives exchange to build its American business. Neither the CFTC nor Polymarket has commented on the renewed probe. An investigation is an inquiry rather than a finding of wrongdoing, and it can still close without any sanction.

A Wider Net Around Polymarket

The reopened review sits inside a broader enforcement climate. In June, reporting emerged that Polymarket had paid individuals to produce videos of fictitious winning bets, and senators Adam Schiff and John Curtis urged the agency to open a probe, while investigators were said to be examining the company’s social media activity. CFTC leadership has set the tone from both directions: Chairman Michael Selig has framed prediction markets as tools for hedging and information discovery that federal regulators, not states, should oversee, and enforcement director David Miller has pledged tough policing of the sector.

Criminal pressure already has a test case. In April, federal prosecutors charged a US soldier, Gannon Ken Van Dyke, with making roughly $400,000 from insider bets on the offshore platform; the indictment alleges he used a VPN and an “exit mode” that made his connection appear to originate abroad. Van Dyke denies the charges, and Polymarket says it referred the matter to authorities. Scale raises the stakes. Intercontinental Exchange, the parent of the NYSE, agreed in October 2025 to invest roughly $2 billion, binding prediction markets closer to traditional finance. Earlier this year, a study found that a small group of traders exploited Polymarket’s five-minute Bitcoin up/down contract, a short-dated smart contract that pays out on an external Bitcoin price feed, by pushing that feed in the final seconds before each close: just 821 wallets, about one in 300 traders, captured $8.2 million across the pushed cycles, and 93% of the losses fell on retail bettors. The company is headquartered in New York and runs its offshore exchange through a Panama-registered entity.

Inquiry, Not a Finding

Our reading is that the load-bearing wall of Polymarket’s offshore model is the location control itself: the 2022 settlement made geofencing the legal basis on which the platform operates at all, so a CFTC conclusion that those controls were porous during the 2024 election cycle would strike at that foundation. The probe touches three pillars at once, the walls around the offshore venue, the US advertising that funnels users toward it, and onboarding on the newer American platform. With roughly $2 billion of ICE capital now committed, the cost of an adverse finding has grown alongside the platform. That said, many CFTC investigations end without charges, and the previous inquiry into the same question did exactly that; nothing disclosed so far confirms a violation.