Singapore and CFTC zero in on Polymarket as wildfire bets fuel public outcry

In what circumstances did a cryptocurrency betting platform spark international turmoil, attracting criticism from Singapore, the FBI, and an uproar from disgruntled users?

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Polymarket’s mounting troubles

Singapore stands out as a beacon for technological advancements and innovative ideas. However, regarding gambling, this dynamic city-state tends to take a more traditional, cautious stance.

On January 12th, it was revealed that the contrast between regulations and cryptocurrency-based platforms like Polymarket emerged clearly, as they encountered strict gambling legislation in Singapore.

As a researcher exploring the digital finance landscape, I’ve come across Polymarket – an innovative platform that enables users to wager using cryptocurrencies like USDC (USD Coin) on real-life occurrences, ranging from election results to crypto market trends. Some view it as a playful form of speculation, but it’s important to note that the Singaporean authorities have categorized it as a gambling establishment.

Attempting to use Polymarket by Singaporeans led to a stern notice under Section 20 of the Gambling Control Act 2022, which is an essential component of Singapore’s stringent regulations. This legislation prohibits any form of gambling conducted without a license from authorized operators.

Anyone breaking this law may be subject to strict consequences, such as fines worth up to 10,000 Singaporean dollars, imprisonment for six months, or a combination of both. The sole legitimate betting choice in Singapore is through Singapore Pools, the government-approved gambling agency.

In a recent social media update, Alex Zuo, who holds the position of Vice President at Cobo Global – a company specializing in digital asset custody services, emphasized the gravity of the current circumstances.

In Singapore, Polymarket is categorized as an online gambling platform. To engage in betting activities, one must do so through the government-owned gambling entity. Any other form of betting could lead to penalties including fines or imprisonment.

On more than one occasion, Polymarket has faced examination. What’s fueling this increased interest, and why does the platform seem to be making headlines for less-than-desirable reasons? Let’s delve further into this developing narrative and its potential consequences.

Betting on tragedy sparks outrage

During one of its most destructive wildfire periods, Los Angeles finds itself in the midst of a tragic disaster, serving as a somber stage for the ongoing controversy surrounding Polymarket’s recent issues.

In a tragic turn of events, the devastating Palisades wildfire – the most destructive fire in Los Angeles’s history – has scorched more than 23,000 acres, left thousands of homes in ruins, and claimed at least 24 precious lives.

For Angelenos, the destruction has sparked profound, philosophical reflections. Yet, for Polymarket, such deeply personal dilemmas have transformed into wager possibilities, providing markets like “When will the Palisades wildfire be completely controlled?” and “How many acres will the Palisades wildfire consume in total?”, which are essentially bets on these events.

This action sparked a surge of public indignation, as numerous individuals have accused Polymarket of capitalizing on the misery of others.

One disgruntled individual expressed, “It’s beyond comprehension why someone would back Polymarket’s betting markets concerning the wildfires. It’s simply distasteful to turn such a devastating event into a means of financial gain.

A frustrated user commented, “Prediction markets directly encourage unethical actions. By establishing a publicly accessible and actively traded pricing system, you’re essentially offering rewards for acts of terrorism.

It has been noted that there could be negative consequences stemming from these markets, including promoting destructive behaviors like arson. One individual even commented, “These markets seem to be motivating individuals to set fires. I can’t think of any opposing viewpoint.

Instead of avoiding the heated discussions, Polymarket seemed to take a stronger stance on the matter. A post from their main Twitter account aimed to introduce politics into the conversation, mentioning Los Angeles Mayor Karen Bass and her lack of presence during the critical situation.

On the other hand, it’s important to note that not everyone shares the positive perspective on Polymarket’s wildfire prediction contests. Certain members of the cryptocurrency community have come to the defense of the platform, drawing comparisons to insurance companies, which also benefit financially from unfortunate events like disasters.

One proponent responded by questioning if there was truly such a significant difference, as they noted that both insurance payouts and prediction market returns are primarily based on financial motivations related to crisis events.

In addition, the user pointed out that the majority of wagers tend to incentivize results such as confining fires instead of expanding them, putting it this way: “The rewards are significantly biased towards extinguishing fires, not fueling their spread.

Despite the defense put forth, it has failed to shift the general sentiment. Most people believe that Polymarket overstepped moral boundaries by developing and promoting wildfire-themed competitions, especially considering the ongoing crisis which has resulted in numerous deaths and displacements.

FBI and CFTC’s tag-team scrutiny

Despite the recent stir caused by public outcry, it’s no secret that Polymarket’s path hasn’t been an easy one since its establishment in 2020. Over time, this platform has often pushed the limits of what’s considered lawful in the realm of prediction markets.

As a researcher delving into the dynamic world of cryptocurrencies, I found myself taken aback when I uncovered reports suggesting that Coinbase – one of the global giants in the crypto exchange sphere – allegedly revealed it had been served a subpoena by the Commodity Futures Trading Commission.

On January 9th, a subpoena was issued to Polymarket and subsequently posted on social media. This legal document requests a broad range of customer data associated with the platform’s operations.

Although Coinbase told its users they didn’t need to take any action right away, it also stated that it could be forced to follow the CFTC’s order if no legal action was taken prior to January 15th.

For individuals keeping tabs on Polymarket, it’s not entirely surprising given their past encounter with regulatory action. In 2022, they agreed to a $1.4 million settlement with the CFTC over running an unlicensed platform providing event-based binary options.

The CFTC’s subpoena to Coinbase occurred after the FBI’s house search on Shayne Coplan, Polymarket CEO, in mid-November.

Early on November 13, 2024, federal authorities executed a dynamic raid on the Manhattan home of Shayne Coplan, the CEO of Polymarket, an incident that’s been labeled by some as a tense operation.

As per the accounts, at 6 a.m., the FBI carried out a search, waking up Copland who is 26 years old. They required entry to his phone and various other digital gadgets based on a search warrant.

The raid took place just a few days following Donald Trump’s win in the American presidential election, an outcome that Polymarket had debatably foreseen with significant chances, despite many conventional polls indicating a close contest.

Without hesitation, Coplan directly confronted X, alleging that the departing Biden administration had initiated a politically driven assault. In simpler terms, he believed it was a desperate attempt to single out businesses thought to be allied with their political adversaries.

As a researcher, I find myself reflecting on recent news about Elon Musk’s potential role as co-head of the Department of Government Efficiency within the incoming Trump administration. Upon hearing this, I can’t help but share my own sentiments, which echo his words: “This situation seems somewhat peculiar.

The FBI’s search and the subsequent CFTC summons aimed at Coinbase suggest that these two agencies are working together to investigate the activities of Polymarket.

From peak to trough and the road ahead

Polymarket’s story unfolds as an exciting saga of rapid expansion, persistent debate, and firm control over the realm of cryptocurrency forecasting markets.

Initially, a small but promising prediction market was on track to generate several million dollars per month by mid-2024. However, this eventually morphed into a dynamic force, propelled by the intense interest surrounding the U.S. elections.

As a data analyst, I’ve been closely monitoring our platform’s performance, and here are some fascinating insights. In June 2024, our platform was generating around $111 million in monthly volume. However, by July of the same year, this figure had more than tripled, surging to approximately $387 million. Quite an impressive growth, wouldn’t you agree?

During the height of the election season, I found myself immersed in the bustling world of Polymarket. In October alone, the trading volume skyrocketed to an astonishing $2.5 billion, marking a fivefold increase from the $500 million recorded in September. November truly outdid itself, setting new records as the platform registered a historic trading volume of $2.62 billion – a figure that had never been surpassed before.

In addition, the total trading volume for Polymarket reached over $4 billion in 2024, which was notable enough to be featured on Bloomberg, CNN, and CNBC – an accomplishment that’s not common for a cryptocurrency-based platform.

At the close of the election period, there was a dose of harsh truth. The trading volume took a sharp dip, particularly in December which recorded only $1.92 billion – a substantial decrease compared to the peak in November.

The decline persisted in January, with trading volumes struggling to reach half a billion dollars halfway through the month. If current trends hold, Polymarket could conclude January near the one billion dollar mark, which would equate to approximately a 50% drop compared to December’s figures.

Although these figures remain strong relative to their levels before the election, they underscore the fact that the platform primarily depends on significant events to maintain its rapid expansion.

Currently, Polymarket is facing significant scrutiny from both the public and government bodies, leaving many questioning just how far the platform intends to stretch the boundaries of its contentious business approach.

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2025-01-14 18:25