The rise of a crypto betting platform has ignited global controversy, prompting heightened scrutiny from regulators in Singapore and the FBI, along with backlash from outraged users.
Polymarket Faces Increasing Scrutiny
Singapore is recognized as a global leader in technology and innovation, yet it maintains a conservative stance on gambling regulations. This tension recently became apparent when Polymarket, a prominent crypto-based prediction market, clashed with Singapore’s strict gambling laws.
Polymarket allows users to place bets using cryptocurrency, specifically USDC, on various real-world events, ranging from election predictions to cryptocurrency price changes. However, Singaporean authorities have officially categorized it as a gambling site.
Users attempting to access Polymarket from Singapore received a stern warning under Section 20 of the Gambling Control Act 2022, which prohibits gambling via unlicensed operators, with serious penalties including fines up to 10,000 Singapore dollars and potential imprisonment.
The only legally permitted betting in Singapore is through Singapore Pools, the state-controlled operator.
This situation drew attention from Alex Zuo, a digital asset custody executive, who emphasized the legal risks associated with using Polymarket in a recent social media post.
“Polymarket is officially deemed a gambling website in Singapore. Users seeking to place bets must go through a state-owned gambling company to avoid fines and imprisonment,” he stated.
Polymarket’s issues are not new. The platform has been in the spotlight for various controversies, raising questions about its operations and ethical implications.
Outrage Over Betting on Tragedies
As Los Angeles battles a devastating wildfire season, Polymarket has captured public attention for offering betting opportunities related to the disaster. The Palisades wildfire, responsible for significant destruction and loss of life, has become the focus of markets such as “When will the Palisades wildfire be fully contained?”
This has sparked public outrage, with many accusing Polymarket of exploiting human suffering for profit.
One user expressed their disgust, stating, “I cannot comprehend how anyone can support Polymarket’s betting markets around these wildfires. It’s abhorrent to monetize this tragedy.”
Another user highlighted the potential for prediction markets to encourage dangerous behaviors, stating, “These markets incentivize antisocial behaviors, effectively rewarding harmful actions.”
Despite the backlash, Polymarket has not shied away from the controversy, even attempting to politicize the discussion by referencing the response of local authorities.
However, some defenders argue that Polymarket’s approach is not fundamentally different from the practices of insurance companies, which also profit from disasters, albeit in a more traditional framework.
Nevertheless, the majority sentiment remains that Polymarket has crossed ethical boundaries by creating markets linked to ongoing tragedies.
Regulatory Scrutiny Intensifies
In addition to public outcry, Polymarket faces mounting regulatory pressures. In January, news broke regarding a subpoena from the Commodity Futures Trading Commission (CFTC) to Coinbase, demanding customer information related to Polymarket’s activities.
This follows a significant raid by the FBI on Polymarket’s CEO Shayne Coplan’s residence, intensifying scrutiny over the platform’s operations, amid concerns about compliance with existing regulations.
Coplan, awoken by federal agents executing a search warrant, has publicly criticized the scrutiny as a politically motivated attack against companies linked to opposing political views.
The developments highlight a coordinated effort by regulatory agencies to assess Polymarket’s operations and its adherence to legal frameworks.
Market Performance and Future Outlook
Polymarket has experienced a rollercoaster ride of rapid growth accompanied by intense controversy. What began with modest monthly revenues rapidly escalated into billions in trading volumes during the election frenzy.
Data indicates that in June 2024, Polymarket reached $111 million in monthly volume, spiking to $2.62 billion in November, marking a remarkable rise in engagement.
However, the subsequent cooling of trading activity post-election has led to a significant decline in volumes. January 2025 has seen trading volumes hover around $500 million, indicating a 50% drop from December figures.
While Polymarket remains a significant player in the crypto prediction market, its future hinges on navigating these controversies and regulatory challenges as it seeks to redefine its operational parameters moving forward.
