The raid, which took place in Manhattan, was part of a broader Justice Department investigation into allegations that the crypto-based prediction platform violated federal gambling laws. During the operation, agents confiscated several electronic devices.
As reported by Straight Arrow News, Coplan, who was not taken into custody, expressed his disappointment with the raid, labeling it as "discouraging." He further accused the outgoing administration of targeting businesses that are perceived to be in alignment with their political adversaries. "This is political retribution," Polymarket stated in an official response.
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Polymarket, a platform that enables users to trade contracts based on the outcomes of various events, including elections, gained considerable attention during the 2024 presidential race. The platform predicted a much higher likelihood of victory for President-elect Donald Trump than traditional polls suggested. This prediction was validated when Trump triumphed over Vice President Kamala Harris with a total of 312 Electoral College votes.
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However, the platform's prediction model has been met with criticism, with detractors arguing that it blurs the line between betting and market trading. This has sparked concerns about transparency and regulatory oversight. Unlike conventional betting sites, Polymarket allows users to buy and sell contracts as odds fluctuate, reflecting shifts in market sentiment.
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Moreover, the platform has faced accusations of market manipulation. Investigations by third parties have revealed instances of wash trading, an illegal practice where traders artificially boost activity by carrying out fraudulent transactions. In the lead-up to the election, a French trader, known as the "Trump Whale," reportedly made a staggering $48 million by betting on Trump's victory. These large wagers have raised questions about the platform's influence and transparency during a politically charged election season.
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Polymarket's run-ins with regulators are not a new phenomenon. In 2022, the company was fined $1.4 million by the Commodity Futures Trading Commission for failing to register with the agency. The platform also temporarily suspended trading during that period.
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The raid has also highlighted the challenges of enforcing U.S. betting restrictions on cryptocurrency-based platforms. Reports suggest that users have been able to bypass these restrictions by using virtual private networks (VPNs).
The raid has elicited reactions from prominent figures in the tech industry. Brian Armstrong, CEO of Coinbase, cautioned that the move could inadvertently increase Polymarket's visibility and influence. Elon Musk, a staunch ally of Donald Trump, took to social media to criticize the raid, describing it as "messed up."