CFTC Investigating Polymarket For Ignoring Fraud
David Genge Published 22/09/2026
According to a report from The Wall Street Journal, the Commodity Futures Trading Commission (CFTC) is investigating prediction market site Polymarket for ignoring fraud on its platform. The Wall Street Journal report indicates that criminal fraudsters used stolen debit cards to connect to thousands of Polymarket US accounts. The stolen cards were used to fund more than 500 accounts and then later in attempts to move the money through various trades. Finally, they sought to withdraw the funds to cards or accounts that they controlled.
The CFTC, the federal regulator of prediction markets, is investigating whether Polymarket was emphasizing the growth of the site ahead of site security.
Did Polymarket look the other way as fraud was ongoing on its site?
The fraudulent activity is alleged to have taken place on the Polymarket platform in February. According to The Wall Street Journal report, payment processor Checkout.com was identifying more than eight out of every 10 deposits it was handling to Polymarket as fraudulent. The industry standard for fraudulent deposits is around 1%. It should be noted that Checkout.com has not independently verified this 80% number.
According to the company website, Checkout.com arms gaming sites with "millions of shared network signals and machine learning insights to block repeat attackers" before they hit a site's checkout. Ultimately, though, it's left to the individual merchant to determine whether flagged transactions will be accepted or rejected.
In this instance, reportedly, Polymarket officials were opting to look the other way. The WSJ report cited former and current Polymarket employees as sources. They claimed that Polymarket CEO Shayne Coplan told employees to "just keep growing and pay a fine if regulators ever find out.”
There's been no comment from Polymarket in response to this alleged comment by Coplan. In a statement supplied to the WSJ, the company did say that it maintains procedures that identify and respond to suspicious activity. The statement added that Polymarket remains committed to cooperating with regulators and law enforcement.
Polymarket did replace its Chief Compliance Officer
The WSJ reported that in the aftermath of this fraudulent activity, Polymarket's chief compliance officer, Andrew Clifford, tendered his resignation in April. Before departing, Clifford did send Polymarket executives a report detailing the fraud issues.
Polymarket U.S. division CEO, Justin Hertzberg, was terminated. The heads of U.S. regulation and anti-money-laundering also left the company. The prediction market site hired the law firm of Sullivan & Cromwell to investigate the matter. Their legal team determined that Polymarket acted in compliance with the applicable regulations.
What might happen next?
Certainly, this development plays into the hands of state gaming regulators. They insist that prediction market sites don't offer the same safety guardrails as state-regulated sports betting operators.
If the WSJ is accurate, there is definite evidence of negligence for the CFTC to investigate.
Speaking to the WSJ, former federal prosecutors indicated that such poor anti-money-laundering safeguards put the company at risk of running afoul of several federal statutes. Those statutes cover money laundering and illicit fund transfers.
Polymarket has only been legal to operate in the USA since July 2025. In fact, before that, in 2022, the company was ordered by the CFTC to pay a $1.4 million civil penalty. This punishment was for offering event-based binary options without operating through a registered market. As part of the settlement, the company was ordered to stop operating noncompliant markets and to cease all violations cited in the order.