CFTC is conducting an investigation into Polymarket, source says

The Commodity Futures Trading Commission has an ongoing, extensive investigation into prediction market platform Polymarket, according to a person familiar with the inquiry. 

The Wall Street Journal first reported the investigation on Friday.

A spokesperson for the CFTC and another for Polymarket both declined to comment. 

News of the investigation comes more than a week after a Wall Street Journal story revealed that Polymarket conducted a misleading marketing campaign, making content creators appear as though they were winning on the platform when in reality they weren’t putting any money down.

The person familiar with the inquiry, who was not authorized to speak publicly, did not disclose a timeline for when the commission’s investigation into Polymarket began. 

Polymarket reiterated to CNBC that it is taking steps in response to the Journal’s investigation into its marketing . 

“We are conducting a comprehensive audit of active promotional content to ensure it complies with our standards, as well as applicable regulatory and legal disclosure requirements,” a spokesperson said in a statement. 

The CFTC investigation marks a reversal for Polymarket’s regulatory fortunes over the past year. While the company was originally banned from allowing U.S. users in 2022 for not properly registering with regulators, investigations by the CFTC and the Department of Justice were later dropped in July of last year without charges.

Polymarket’s CFTC-regulated U.S. exchange launched in December, reopening access to domestic users, and had a waitlist to access the platform lifted six weeks ago.

The CFTC under Chairman Michael Selig has been aggressive in its support for prediction markets, but the investigation into Polymarket would mark the commission’s first high-profile inquiry into an event contract platform under his leadership.