- US Senator Richard Blumenthal is the latest lawmaker to go after Polymarket.
- Polymarket has denied it turns a blind eye to insider trading.
- Lawmakers are grappling with the crypto-powered betting industry as it explodes in popularity.
Polymarket has defended how it fights insider trading after a US senator wrote a letter to the crypto-powered betting market’s CEO, accusing it of being an “illicit market.”
US Senator Richard Blumenthal on Thursday accused the platform of letting users profit off of national security secrets and slammed it for opening a market to bet on the rescue of a US soldier stranded in Iran.
“Polymarket operates in full compliance with applicable law, and our insider trading rules are the exact lines that the CFTC and courts draw for derivatives markets,” Olivia Chalos, Polymarket’s deputy chief legal officer, wrote on X.
She added that the platform shares Blumenthal’s “commitment to national security and market integrity.”
The clash comes as regulators and lawmakers grapple with prediction markets’ skyrocketing popularity. Politicians from both parties have spoken out against the industry, but it has a powerful ally in Michael Selig, the chair of the Commodity Futures Trading Commission.
The letter
Blumenthal’s letter — the latest from US lawmakers — claims that prediction markets turn a blind eye to or “encourage the use of secrets.”
The lawmaker demanded Polymarket founder Shayne Coplan explain why the company allows bets on deaths of heads of state and military events, and whether it reports suspicious accounts to the government.
Blumenthal was particularly concerned with the fact that Polymarket let users place bets on when the US might rescue warplane crew members who were shot down in Iran.
Polymarket took down the market after other lawmakers flagged it earlier this week.
“Polymarket's new rules on insider trading are paltry, inadequate, and late,” added Blumenthal.
In response to DL News' request for comment, Polymarket pointed to new rules it released last month aimed at combatting bettors' use of stolen information or illegal tips.
Prediction market explosion
Polymarket exploded in popularity and relevance in 2024 when users bet billions of dollars on the US presidential election and, in favoring Donald Trump, outperformed traditional pollsters, who had pegged Kamala Harris as the likely winner.
The platform allows users to deposit USDC on the Polygon blockchain to make bets.
Since its growth, major companies like trading app Robinhood and crypto exchange Coinbase have started offering prediction market services.
Lawmakers this year have introduced a number of bills to try and regulate betting platforms — with one even trying to block federal officials from making bets on the site.
Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.
