FBI Raids Polymarket Founder at 6 AM, Suspected of Market Manipulation

Source: Azuma, Odaily Planet Daily

When the FBI Comes Knocking

The New York Post reported today that insider sources revealed Polymarket founder Shayne Coplan experienced a raid by the Federal Bureau of Investigation (FBI) at his home in the SoHo area of New York—around 6:00 am local time, Coplan was awakened in his home, and FBI agents requested his phone and electronic devices but did not arrest Coplan.

Bloomberg later followed up with a report stating that the cause of this raid was the U.S. Department of Justice (DOJ) investigating Polymarket, alleging that the platform violated a "block U.S. users' access" agreement made with the Commodity Futures Trading Commission (CFTC) in 2022 and was still accepting trades from U.S. users.

After the incident, Coplan himself posted two updates on X, the first one jokingly suggesting he needed a new phone... The second one was a direct response stating: "It is frustrating that the current administration would take a last-ditch effort to pursue companies they believe are associated with political opponents. We are firmly committed to a non-partisan stance, today being no exception, but the current administration should do some self-reflection and realize that taking a more business-friendly, more entrepreneurship-friendly approach might change their electoral fortune this time around. Polymarket has brought value to tens of millions of people in this electoral cycle without harming anyone. We are proud of that. I can hold my head up high and say that the future of America, especially the future of American entrepreneurial spirit, has never been brighter. In the face of adversity, we will continue to build."

The U.S. Election and the Rise of Polymarket

Polymarket can be said to be the most high-profile application in the cryptocurrency industry during this cycle—arguably one of few.

With a series of prediction markets built around the theme of the U.S. election, Polymarket saw rapid growth in 2024. Around April of this year, the platform's monthly volume was only around $40 million, but by October, it had surged to $2.5 billion. During the election, Polymarket experienced a surge in traffic, with the cumulative transaction volume related to the 2024 U.S. presidential election alone exceeding $3.6 billion.

In addition, Polymarket also achieved a disruption in the credibility aspect of traditional media—while CNN and other mainstream media outlets successively indicated Harris's lead in the polls, Polymarket consistently showed Trump's probability of winning on top.

After Trump's eventual victory, Polymarket also declared victory on its official X account: "Polymarket has proven that prediction markets are wiser than polls, media, and experts. Polymarket consistently and accurately predicted the results, far ahead of these three, demonstrating the power of high-throughput, high-liquidity prediction markets like Polymarket pioneered..."

Does the "Charge" Point to Allowing U.S. Users Access, but is that Really the Case?

From media reports, the U.S. Department of Justice's accusation against Polymarket is that the platform continues to accept transactions from U.S. users, contradicting the agreement Polymarket and the CFTC reached in 2021.

In January 2022, the CFTC settled with Polymarket over "offering event-based binary options products," with Polymarket agreeing to pay a $1.4 million civil penalty because the company operated in the U.S. without registration. As part of the settlement agreement, Polymarket committed to gradually cease operations in the U.S. while continuing to operate abroad.

However, despite technically disallowing U.S. users to bet on Polymarket since then, the platform still has a significant number of U.S. users—Forbes reported in August that Similarweb data showed 25% of the traffic to the Polymarket website still originates from the U.S.

In fact, the CFTC has long been opposed to platforms like Polymarket offering election-related prediction market methods. Apart from Polymarket, two other well-known prediction platforms outside the cryptocurrency industry, PredictIt and Kalshi, also have disputes with the CFTC on this issue.

However, the industry generally does not believe that the current U.S. Department of Justice investigation into Polymarket is truly related to this issue—as Coplan emphasized that this matter may be politically motivated, the New York Post in its original report also echoed the words of an insider: "The current government is likely trying to charge Polymarket with market manipulation and manipulating polls to support Trump."

Community Response

After this morning's investigation was exposed, various sectors of society have successively voiced support for Coplan.

Elon Musk directly replied below Coplan's second tweet, saying, "Indeed"; Coinbase CEO Brian Armstrong, on the other hand, more directly criticized the investigative action, stating that the Department of Justice's actions were entirely politically motivated, but this will only serve to further strengthen Polymarket's influence.

Furthermore, the meme community quickly reacted to the matter, with the meme token themed "Free Coplan" reaching a market value of up to 30 million dollars.

However, the issue is that Coplan was clearly not arrested, only had his phone confiscated, and is still free... (or maybe this is all part of the meme).

For all the meme warriors gearing up for battle, please make sure to conduct thorough research and risk management before taking action.

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