Key Takeaways
- The CFTC is probing whether Polymarket failed to keep U.S. users off its offshore platform, per Reuters.
- The inquiry covers Polymarket’s location controls, U.S. advertising, and onboarding on its U.S. platform.
- A judge refused to dismiss charges against a soldier accused of making $400,000 on insider bets via a VPN.
Geolocation Controls Back Under the Microscope
The CFTC is investigating whether prediction market operator Polymarket violated a 2022 enforcement deal in which it promised to ban U.S. users from its main overseas platform, Reuters reported on Tuesday, citing two people familiar with the matter. The inquiry revives one the agency closed last year without bringing charges, and sits inside a broader investigation the CFTC opened into the company earlier this year.
According to the sources, the agency is examining how Polymarket determines where its customers are located and its advertising activities in the U.S. It is also scrutinizing the onboarding processes and customer protections on Polymarket’s U.S. platform. One of the people said the focus is on the company’s past controls and processes. Spokespeople for the CFTC and Polymarket declined to comment, and Reuters noted that probes are not necessarily an indication of wrongdoing.
The 2022 deal dates to January of that year, when the CFTC fined Polymarket $1.4 million for offering unregistered event-based binary options. As 2024 U.S. election betting on the platform grew, the CFTC opened a probe into whether Polymarket was complying with the settlement, the Justice Department opened a related investigation, and the FBI searched CEO Shayne Coplan’s New York home in November 2024.
Both agencies closed their probes in July 2025, and Polymarket bought a CFTC-licensed exchange and began relaunching in the U.S. late last year. Reuters said the new details “raise fresh questions” over why those earlier probes were closed. A Justice Department spokesperson declined to comment.
The Wall Street Journal and Bloomberg first reported a broad CFTC probe of Polymarket in June, shortly after the Journal found that Polymarket paid creators to stage fake winnings in a campaign aimed at U.S. users, the platform was barred from serving.
The geolocation question is also central to what prosecutors call the first insider-trading prosecution of a prediction market trader. U.S. District Judge Margaret Garnett on Monday denied a motion to dismiss the indictment of Army Master Sergeant Gannon Ken Van Dyke, who is accused of betting on Polymarket ahead of the U.S. operation that captured Venezuelan President Nicolás Maduro and turning about $34,000 into more than $400,000. According to the indictment, Van Dyke accessed Polymarket’s offshore platform using a VPN and an “exit mode” that geolocated to a foreign country.
Van Dyke pleaded not guilty in April, and his lawyers argued that his wagers were not illegal swaps under federal commodities law. Garnett ruled that question could not be settled at this stage, writing that the motion could succeed “only if the event contracts alleged in the indictment cannot be swaps as a matter of law, and Van Dyke has failed to make that showing.” His trial is tentatively scheduled for Dec. 7.
Polymarket has said it referred the Van Dyke matter to authorities and that it has revamped its controls. The platform said it expressly prohibits VPNs and similar tools used to get around its geographic restrictions. Its global head of investigations and intelligence, Shana Bautista, told Reuters in August that U.S. users circumventing the restrictions was not “a really prevalent issue.” This week, Bautista told NPR that Polymarket had investigated dozens of bets tied to the midterm elections ahead of the Nov. 3 vote.
