- The CFTC subpoenaed Coinbase for user data related to Polymarket, reflecting increased regulatory scrutiny.
- Polymarket has grown to 349,500 monthly active users despite fines, raids, and U.S. bans.
- Critics like Edward Snowden have slammed Coinbase for its high compliance with government requests.
The Commodity Futures Trading Commission (CFTC) has reportedly issued a subpoena to Coinbase regarding Polymarket, a prediction market platform, according to sources close to the matter. This request, aimed at obtaining “general customer information” tied to Polymarket, reflects heightened regulatory scrutiny of the blockchain-based platform.
A screenshot of an email sent by Coinbase to select users regarding the CFTC’s request was shared by Eric Conner, founder of ETHHub, on X (formerly Twitter). The email mentioned that Coinbase “may be required” to share user information with the CFTC, depending on legal proceedings.
Polymarket’s Rocky History with Regulators
Launched in 2020, Polymarket quickly gained attention for letting users bet on outcomes of real-world events, from politics to sports. Its rise to fame during the 2024 U.S. presidential election attracted both users and regulators.
In 2022, the CFTC fined Polymarket $1.4 million for operating without proper registration, banning U.S. citizens from accessing the platform. Shortly after, the FBI raided Polymarket CEO Shayne Coplan’s New York apartment. Though Polymarket claimed the raid was politically motivated, reports linked it to a Department of Justice investigation.
Polymarket has continued to grow despite these challenges, recently surpassing 349,500 monthly active users, up from November’s record of 293,700, according to Dune Analytics.
Coinbase’s Approach to Government Requests
A spokesperson for Coinbase told Decrypt that the company evaluates government requests for information with care. While Coinbase may object to legally insufficient requests or try to narrow their scope, they acknowledge that some requests require compliance.
Coinbase’s cooperation with regulators has drawn criticism. In 2022, Edward Snowden criticized the platform for what he called “toxic and embarrassing” levels of compliance, suggesting that such practices erode user privacy.
The Future of Prediction Markets
Polymarket has faced legal scrutiny for allowing bets on political outcomes, raising concerns about potential impacts on election integrity. While the CFTC has pushed back on such contracts, other platforms, like Kalshi, have managed to list similar offerings.
Overseas, Polymarket has also encountered challenges. In November, it voluntarily blocked French users following inquiries from France’s gaming regulator into compliance with local gambling laws.
Despite these hurdles, Polymarket’s growth underscores the appeal of prediction markets. CEO Shayne Coplan has argued that platforms like Polymarket provide more accurate insights into political outcomes than traditional polling methods. Whether regulators embrace or restrict such innovations remains an open question.
Final Thoughts
The CFTC’s subpoena of Coinbase in connection with Polymarket highlights ongoing tension between regulators and blockchain-based platforms. As prediction markets like Polymarket grow in popularity, their future will likely depend on how they adapt to increasing regulatory scrutiny at home and abroad.
