By The US Commodity Futures Trading Commission (CFTC) is investigating whether prediction market operator Polymarket complied with a 2022 enforcement settlement requiring it to stop offering noncompliant event contracts to American users.
The investigation forms part of a broader inquiry opened earlier in 2026, Reuters reported on October 27, citing two people familiar with confidential enforcement matters.
Investigators are examining whether Polymarket maintained adequate controls to prevent US residents from accessing its offshore platform, alongside the company’s advertising activities within the United States. The CFTC is also reviewing customer onboarding procedures and protections at Polymarket’s separate US operation, which began rolling out in late 2025.
Neither the regulator nor Polymarket commented on the reported investigation. No new charges have been announced, and the existence of an investigation does not establish that Polymarket violated its earlier settlement.
Regulators Revisit $1.4 Million Settlement
The investigation traces back to January 3, 2022, when the CFTC settled charges against Blockratize, the company operating Polymarket. The regulator alleged that Polymarket offered event-based binary options without registering as a designated contract market or swap execution facility.
The settlement imposed a $1.4 million civil penalty and required the company to wind down noncompliant markets and cease violating applicable derivatives regulations. Polymarket subsequently restricted US access to its offshore prediction market.
However, its growing popularity during the 2024 presidential election prompted questions about whether American traders were circumventing geographic restrictions. The CFTC and Department of Justice opened investigations that year, examining potential violations of the earlier agreement.
Federal agents also searched Polymarket chief executive Shayne Coplan’s New York residence in November 2024. Those investigations ended without charges in July 2025, when Coplan publicly stated that both agencies had cleared the company.
The renewed inquiry reportedly focuses partly on the effectiveness of historical controls, including location verification and restrictions on advertising. Polymarket maintains that it prohibits users from employing virtual private networks to bypass geographic restrictions and operates systems intended to detect unauthorized access.
The CFTC has not publicly identified specific instances of settlement violations arising from its latest investigation.
US Expansion Creates Additional Compliance Questions
The investigation comes as Polymarket expands its regulated American business. In July 2025, the company announced its acquisition of QCX, a CFTC-licensed derivatives exchange, establishing a route to offer event contracts domestically.
Its US platform operates separately from the offshore service and is subject to applicable federal requirements covering customer protection and market oversight. Reuters reported that regulators are examining whether the newer platform’s onboarding procedures and safeguards meet those obligations.
The review therefore extends beyond historical offshore access restrictions to aspects of Polymarket’s current domestic operations. Separately, an April 2026 case raised additional questions about the effectiveness of geographic controls.
US authorities charged a soldier with allegedly earning approximately $400,000 through insider trading on Polymarket’s offshore platform. Prosecutors alleged that the defendant used a VPN and location-masking tools to access restricted markets.
He pleaded not guilty, and the allegations remain unproven. The case does not independently establish that Polymarket violated its settlement, although it illustrates the enforcement challenges associated with restricting access to internet-based trading platforms.
The renewed scrutiny also comes amid rapid growth in prediction markets offering contracts tied to sports, elections, economic indicators and cryptocurrency prices. Federal regulators face increasing questions about market manipulation, insider trading and the relationship between derivatives oversight and state gambling laws.
For Polymarket, the immediate regulatory issue is whether its historical restrictions satisfied the 2022 order while its newer American platform meets current requirements. The investigation could conclude without action, as the earlier inquiries did, or lead to additional enforcement proceedings if regulators identify violations.
Until formal findings emerge, the reported investigation represents renewed scrutiny rather than a determination of wrongdoing.