CFTC Subpoenas Coinbase in Polymarket Probe

Key Takeaways

• The subpoena requires Coinbase to provide customer information about the case.
• Coinbase will need to comply with the subpoena unless a legal motion to block it is filed by January 15, 2025.

The United States Commodity Futures Trading Commission (CFTC) has subpoenaed cryptocurrency exchange Coinbase as part of its investigation into the crypto-based prediction platform Polymarket. The subpoena, issued on January 8, 2025, requires Coinbase to provide customer information about the case.

Coinbase notified its users about the legal development, stating it might be required to share account-related information with the CFTC. The company clarified that no immediate action is required from customers. However, Coinbase will need to comply with the subpoena unless a legal motion to block it is filed by January 15, 2025.

Polymarket has been under scrutiny for allegedly allowing U.S. users to participate in election-related betting, a practice regulated by the CFTC and limited to specific markets. This investigation follows earlier legal troubles for Polymarket, which settled with the CFTC in 2022 by paying a $1.4 million fine for running an unregistered derivatives trading platform. As part of that settlement, Polymarket agreed to stop offering services to U.S.-based users.

The current investigation intensified in November 2024 when the Federal Bureau of Investigation (FBI) raided the New York home of Polymarket’s founder and CEO, Shayne Coplan. During the raid, authorities reportedly seized electronic devices as part of an inquiry into the platform’s activities. Reports indicate that Polymarket facilitated betting on the outcome of the U.S. presidential election, leading to significant profits for some users. It is estimated that certain investors made up to $50 million from bets predicting Donald Trump’s victory.

The subpoena to Coinbase comes during a time of transition in U.S. politics and regulatory leadership. CFTC Chair Rostin Behnam is set to step down before President-elect Donald Trump takes office on January 20, 2025. The incoming administration has reportedly been evaluating candidates to lead the CFTC, signalling a potential shift toward a more crypto-friendly regulatory approach.

Polymarket’s issues are not limited to the U.S. In November 2024, French authorities launched a probe into the platform’s compliance with local gambling laws. Despite being based in New York, Polymarket has blocked access to U.S. users since 2022, following its settlement with the CFTC.