CFTC Probed Over Polymarket

Two senators on Thursday urged the Commodity Futures Trading Commission to investigate Polymarket over what they called “deeply troubling” allegations of deceptive marketing.

Sens.

John Curtis (R-Utah) and Adam Schiff (D-Calif.) sent the letter to CFTC Chair Michael Selig following a Wall Street Journal investigation into the platform’s promotional practices.

The senators wrote that the alleged conduct “does not resemble a sober financial market designed for hedging or price discovery.” The CFTC is already conducting an ongoing investigation into Polymarket, according to a person familiar with the matter cited by the Journal.

Polymarket has been banned from accepting U.S. users since a 2022 CFTC settlement, though lawmakers including Sen.

Richard Blumenthal (D-CT) have pointed out that the ban is easily bypassed using a VPN.

Polymarket’s Marketing Scheme The Journal reviewed 1,105 videos made by mostly college-age social media creators promoting Polymarket.

In nearly 10% of the videos, creators allegedly used outdated footage or altered headlines to suggest winnings of nearly $900,000, when the real trades would have lost more than $166,000.

The investigation also alleges Polymarket created a lookalike website called “Poiymarket,” spelled with a capital “I” instead of an “L,” where creators filmed staged trades.

A separate Politico investigation reported that Matthew Modabber, Polymarket’s chief marketing officer, allegedly used a personal PayPal account to pay roughly two dozen influencers who did not disclose the payments.

Consumer Lawsuit Names Coplan And Modabber A consumer-protection group sued Polymarket CEO Shayne Coplan and Modabber on Friday in Washington, D.C., alleging the company targeted college students with deceptive advertising.

Rep.

James Comer ‘s House Oversight Committee is also conducting an insider trading probe into both Polymarket and Kalshi.

Both platforms have said they ban insider trading.

The investigation was sparked in April when the Department of Justice and CFTC indicted U.S.

Army Special Forces soldier Gannon Ken Van Dyke, who allegedly used classified intelligence on “Operation Absolute Resolve,” the U.S. capture of Venezuelan President Nicolás Maduro, to walk away with over $400,000.

The president’s son, Donald Trump Jr., is an investor in Polymarket and a paid adviser to Kalshi.

President Donald Trump recently called politicians who want states to regulate prediction markets “SCUM” on Truth Social, defending the CFTC’s exclusive authority over the sector.

In a request for comment, Polymarket said the comany is “conducting a comprehensive audit of active promotional content to ensure it complies with its standards, as well as applicable regulatory and legal disclosure requirements." Image: Shutterstock Kalshi and have an existing data collaboration agreement.