CFTC Fines Binary Options Platform Polymarket $1.4M
CFTC Fines Polymarket for $1.4 Million
According to an official notification, the CFTC filed charges against the Delaware-registered Blockratize, operating as Polymarket 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 order requires that Polymarket pay a $1.4 million civil monetary penalty, facilitate the resolution (i.e. wind down) of all markets displayed on Polymarket.com that do not comply with the Commodity Exchange Act (CEA) and applicable CFTC regulations,” the official press release stated.
According to the regulator, Polymarket offered binary contracts around June 2020 including event-market contracts. It allowed traders to bet on any particular event like the outcome of the US presidential elections including even the price targets of a cryptocurrency by a specified date.
As of yet, Polymarket has offered more than 900 even-based contracts since its inception, which were hosted as smart contracts on a blockchain. These event-based contracts are swaps under federal law and therefore can only be offered on a registered exchange in accordance with the CEA and CFTC regulations. Regarding this, Acting Enforcement Director Vincent McGonagle stated:
“All 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 ‘DeFi’ space.”
Under CFTC’s order, the company will now stop offering markets by January 14, 2022, and commit to making all funds available to users by January 24. Polymarket will also cease and desist from any further violations of the CEA. However, it does not appear the company itself will be shut down.
