CFTC Fines ‘Decentralized’ Prediction Market Platform Polymarket $1.4 Million, Shuts Down Noncompliant Markets – Regulation Bitcoin News
The U.S. Commodity Futures Trading Commission (CFTC) has ordered a “decentralized” prediction market platform to close down non-compliant markets and pay a superb of $1.4 million. “Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as ‘event markets,’” mentioned the derivatives regulator.
CFTC Takes First Crypto Enforcement Action of the Year
The Commodity Futures Trading Commission (CFTC) has taken the primary crypto enforcement motion of the yr within the U.S. The derivatives regulator introduced that it entered an order Monday “filing and simultaneously settling charges against Delaware-registered Blockratize, Inc. d/b/a Polymarket.”
The firm was charged “for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market (DCM) or registration as a swap execution facility (SEF),” the CFTC wrote. The regulator detailed:
The order requires that Polymarket pay a $1.4 million civil financial penalty, facilitate the decision (i.e. wind down) of all markets displayed on Polymarket.com that don’t adjust to the Commodity Exchange Act (CEA) and relevant CFTC rules.
The New York city-based firm should additionally “cease and desist from violating the CEA and CFTC regulations, as charged.”
According to the order, “By January 14, 2022, [the] respondent shall cease offering access to trading in markets displayed on Polymarket.com” except they adjust to the CFTC’s guidelines.
Polymarket describes itself as “a decentralized information markets platform, harnessing the power of free markets to demystify the real-world events that matter most to you.” It advertises that customers can “bet” on their beliefs in regards to the end result of real-world occasions.
The website lists quite a few markets that customers can wager on, equivalent to “What percent of US Covid-19 cases will be from the Omicron variant on January 1, 2022?” and “Will annual inflation in the European Union be 5.4% or more in December?”
However, its web site notes: “The markets listed here are for informational purposes only. We take no profits from them.”
According to the derivatives watchdog, “Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as ‘event markets’” since roughly the start of June 2020.
Noting that the platform “has offered more than 900 separate event markets since its inception while deploying smart contracts hosted on a blockchain to operate the markets,” the regulator described:
Polymarket creates, defines, hosts, and resolves the buying and selling and execution of contracts for the event-based binary choice markets provided on its web site.
The CFTC defined that “Polymarket’s markets cover a large variety of binary options, including cryptocurrency [and] digital assets, current events, and financial conditions, among other events.”
The regulator emphasised that occasion market contracts provided on the Polymarket platform “constitute swaps under the CFTC’s jurisdiction, and therefore can only be offered on a registered exchange in accordance with the CEA and CFTC regulations.” The platform’s civil financial penalty has been decreased because of its “substantial cooperation with the Division of Enforcement’s investigation of this matter,” the CFTC famous.
Following the CFTC’s announcement, Polymarket issued a press release, explaining:
We are happy to substantiate that we’ve efficiently agreed to a settlement with the CFTC … the three markets set to resolve after January 14, 2022 that don’t adjust to the Act shall be prematurely wound down and individuals refunded.
What do you consider the CFTC’s motion towards this prediction market? Let us know within the feedback part beneath.
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