The US Commodity Futures Trading Commission (CFTC) has fined prediction platform Polymarket with $1.4 million for servicing OTC binary options trading without the proper registration. According to the press release:
“Polymarket has offered over 900 separate event markets since its inception by hosting smart contracts on the blockchain to manage them. Polymarket creates, defines, maintains and trades and enforces binary options contracts on its website.”
The CFTC has added that “all derivatives markets must operate within the law, regardless of the technology they use.”
Per the report, Polymarket will have to pay a reduced fine because it is cooperating with the regulator. The project has confirmed the “successful settlement” of the issue.
Polymarket allows users to place bets on real-world events, for example, the deadline for approving an infrastructure plan or the number of people infected with the coronavirus. The prices are determined by automatic market maker technology.