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CFTC Probe After Hack
The Commodity Futures Trading Commission opened an “extensive investigation” into prediction market platform Polymarket after a reported $3 million hack, as bipartisan pressure and a separate consumer protection lawsuit targeted the company’s marketing practices.
Benzinga said the CFTC and Polymarket did not immediately respond to its request for comment, while the probe was reported by Politico citing sources.
The controversy follows Polymarket’s disclosure of a third-party vendor hack on Thursday that injected a malicious script into its frontend, and Polymarket pledged to refund affected users in full.
Benzinga also tied the new scrutiny to prior regulatory trouble, including that in 2022 the company paid $1.4 million to settle CFTC charges for illegally operating a financial exchange.
In the same Benzinga account, Sens. John Curtis (R-Utah) and Adam Schiff (D-Calif.) urged the CFTC in a Thursday letter to dial up oversight, citing Wall Street Journal reporting on Polymarket’s alleged use of “deceptive videos” on social media.
Lawmakers Cite Deceptive Ads
Two U.S. senators asked the Commodity Futures Trading Commission to investigate and provide written responses over allegations of deceptive marketing involving Polymarket, with Cointelegraph cited as reporting that Republican Senator John Curtis and Democratic Senator Adam Schiff sent a letter to CFTC Chairman Mike Selig.
The digital투데이 account said the senators cited reports that Polymarket paid social media influencers to film fake trading videos on sites made to look like its platform, and it said the letter followed a Wall Street Journal report published on June 20.
That Wall Street Journal reporting, as described by 디지털투데이, found that after reviewing more than 1,100 videos, about 70 percent contained fake bets totaling nearly $2 million, and it said many creators did not disclose they were paid by Polymarket.
디지털투데이 also said Polymarket responded earlier this week that it was conducting a comprehensive audit of promotional content to check compliance with its standards, relevant regulations and legal disclosure requirements.
The same account reported that Polymarket did not comment on the letter or reports of a CFTC investigation.
Industry Pushback and Stakes
As the CFTC probe into Polymarket drew criticism, CryptoRank described industry leaders pushing back against the investigation by arguing that innovation is at risk and warning it could chill investment and adoption in prediction markets and related DeFi and crypto data platforms.
“The Commodity Futures Trading Commission reportedly launched an “extensive investigation” into prediction market giantPolymarketon Friday, amid mounting bipartisan pressure and a separate consumer protection lawsuit over allegedly deceptive social media ads”
CryptoRank said the probe is meant to assess whether Polymarket’s event-based contracts violate commodity derivatives or gambling laws, and it framed the dispute as a regulatory gray zone over how to classify platforms like Polymarket.
In the same CryptoRank account, an industry analyst who spoke on condition of anonymity said, “It’s about harnessing market forces to aggregate information. The CFTC’s approach risks pushing this innovation offshore or underground.”
CryptoRank also quoted another industry view that “The regulatory framework was built for a different era,” and it said applying laws designed for traditional financial derivatives or sports betting to a novel technology platform fails to account for prediction markets’ benefits and risks.
Separately, CoinDesk reported Polymarket sought CFTC approval to reopen its main exchange to U.S. traders, saying the measure would help Polymarket compete with Kalshi in the U.S. and bring more event-trading activity under the CFTC’s regulatory oversight.
