New York-based crypto predictions platform Polymarket has reached a settlement with the Commodity Futures Trading Commission (CFTC) to pay a fine of $1.4 million. <\/p>\n
Polymarket is a decentralized platform that enables users to bet on the outcomes of event markets such as pro-sports games and political elections via binary options contracts. <\/p>\n
On Jan. 3, the CFTC announced that it had entered an order filing and simultaneously settling charges against Polymarket, with the platform found to have operated an \u201cillegal unregistered or non-designated facility\u201d since June 2020. <\/p>\n
Under the order, Polymarket is required to pay a civil monetary penalty of $1.4 million along with winding back any markets on the platform that do not comply with CFTC and Commodity Exchange Act (CEA) regulations. Polymarket responded with a Jan 4. tweet stating that they were “excited to move forward”.<\/p>\n
The CFTC stated that event market contracts backed by a pair of binary options \u201cconstitute swaps\u201d under its jurisdiction and that platforms offering exposure to the market must be regulated under the CFTC and CEA. <\/p>\n
In the announcement, the CTFC\u2019s acting director of enforcement Vincent McGonagle urged derivatives platforms to register with the enforcement body, he paid particular attention to those operating in the decentralized finance (DeFi) sector: <\/p>\n
\u201cAll derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or \u2018DeFi\u2019 space.\u201d<\/p><\/blockquote>\n
The CFTC did note, however, that Polymarket received a reduced civil monetary penalty due to its \u201csubstantial cooperation\u201d with the investigation into the platform.<\/p>\n