Polymarket faces renewed CFTC scrutiny over $1.4m settlement

Polymarket has faced renewed CFTC scrutiny over whether it honored the U.S. access restrictions tied to its $1.4 million settlement in 2022, according to Reuters.

Reuters reported on Oct. 27, citing two people familiar with the matter, that the review covers the offshore platform’s location controls and U.S. advertising, alongside onboarding and customer protections on its separate American exchange.

Polymarket’s offshore access controls face another review

According to Reuters, the settlement review forms part of an investigation opened earlier this year, with one source describing scrutiny of past controls and processes. The company is based in New York and has an offshore entity registered in Panama.

Spokespeople for Polymarket and the Commodity Futures Trading Commission declined to comment to the news agency. Reuters reported that neither the CFTC nor the Justice Department has explained why similar investigations ended last year.

The earlier inquiries examined compliance with the settlement, and the FBI searched CEO Shayne Coplan’s home in November 2024. Both investigations closed without charges in 2025. Reuters’ latest account describes an investigation, with no announced finding that the company breached the agreement.

The 2022 order set deadlines for closures and redemptions

In its Jan. 3, 2022, enforcement announcement, the CFTC identified the respondent as Delaware-registered Blockratize, Inc., doing business as Polymarket. The agency said the company offered event-based binary options without registration as a swap execution facility or designation as a contract market.

The CFTC found that Polymarket had operated the unregistered facility since approximately June 2020 and offered more than 900 event markets. Contracts covered cryptocurrency prices, public health figures and election results, with trading conducted through blockchain-based smart contracts.

A $1.4 million civil penalty accompanied requirements to wind down noncompliant markets and stop the violations charged. The agency said substantial cooperation with its investigation contributed to a reduced penalty.

The underlying order, in docket 22-09, imposed specific deadlines. By Jan. 14, 2022, Polymarket had to stop offering access to noncompliant trading, resolve affected markets and make funds available for full redemption by participants holding open positions.

Written certification that those commitments had been fulfilled was due by Jan. 24. The order separately required certification that access was no longer offered unless the offering, solicitation or trading complied with the Commodity Exchange Act and applicable regulations.

Blockratize accepted the settlement without admitting or denying its findings and conclusions, subject to the order’s provisions governing their use in proceedings involving the Commission.

The order’s description of the original service recorded a minimal account-opening process. Customers supplied an email address and chose a username, with no other identifying information required to begin trading. The CFTC described those arrangements as part of the conduct examined in 2022. Its findings concerned the platform during that investigation’s relevant period.

A regulated U.S. exchange operates separately

In July 2025, Polymarket completed its $112 million QCEX acquisition, purchasing a derivatives exchange and clearinghouse licensed by the CFTC. The transaction was announced July 21, shortly after the earlier federal investigations ended.

Based in Boca Raton, Florida, QCEX held designated contract market and derivatives clearing organization licenses. The purchase supplied regulatory infrastructure for Polymarket’s return to the American market through a domestic business.

By Aug. 31, 2026, Polymarket was describing its American exchange as separate from its international blockchain platform. Its global head of investigations and intelligence, Shana Bautista, told Reuters that the company’s controls could stop the vast majority of Americans from using the offshore service.

Bautista, a former FBI investigator and Coinbase analyst, described systems combining machine learning, blockchain analytics, trade surveillance, open-source research and outside services. Discussing users evading location restrictions, she said, “I do not see it being a really prevalent issue.”

The company said its trade surveillance and investigations had generated more than 100 referrals to law enforcement. Its account of the controls and their effectiveness remained the company’s own assessment.

Advertising scrutiny predates the latest settlement details

As crypto.news reported June 30, the CFTC’s business and marketing investigation was already examining several parts of Polymarket’s operations, including social media activity. Bloomberg described the inquiry, while CNBC separately reported that it remained active.

Following allegations concerning promotional videos, Polymarket told CNBC that it was auditing active promotional content for compliance with company standards and legal disclosure requirements.

Senators Adam Schiff and John Curtis had asked CFTC Chair Michael Selig to explain the agency’s oversight of advertising, influencer disclosures, age verification, and consumer safeguards. Their questions included how the regulator had prevented the offshore platform from attracting American users after the settlement.

A separate city council marketing inquiry followed in August. New York City Council Speaker Julie Menin sought information from Polymarket, Kalshi, Coinbase and Gemini Titan concerning how event-contract products were promoted to consumers.

The council’s accompanying memo said its inquiry concerned marketing and consumer protection, excluding the question of whether event-contract exchanges violated state gambling laws. Menin’s office said a hearing would form part of the investigation.