An article summarized by The Wall Street Journal:
Polymarket’s U.S. prediction-betting platform faced a major fraud problem earlier this year after criminals linked stolen debit cards to thousands of accounts and attempted to move at least $10 million through the platform. According to people familiar with the situation, the payment processor at one point rejected more than 80% of deposits as potentially fraudulent, far above the roughly 1% industry norm cited in the report. The incident reportedly overwhelmed Polymarket’s compliance team and contributed to executive departures and an internal investigation.
The problems extended beyond the February fraud attack. Polymarket has faced complaints involving withdrawals, software bugs and account security, while regulators and government officials are examining various aspects of its business. The company is facing a CFTC investigation, a New York City Council inquiry into advertising practices, lawsuits from traders and more than a dozen state cases questioning whether prediction markets operate as unlicensed gambling platforms. In July, nearly 500 users were reportedly affected by another security incident that allegedly allowed attackers to access existing accounts using stolen personal information.
At the same time, CEO Shayne Coplan has continued pushing aggressive growth, including major partnerships with celebrities and sports organizations and plans to expand the platform’s market offerings. Polymarket has since hired additional risk-management and compliance personnel, improved fraud controls and brought in experienced executives as it prepares for a potential IPO. The company is also reportedly raising $1 billion at a valuation around $21 billion, while maintaining that it is committed to market integrity, responsible growth and stronger compliance systems.
