“Keep expanding. If the regulators find any problem, we’ll pay the fine anyway.” Written by: Katherine Long, Caitlin Ostroff, Neil Mehta; Compiled by: Chopper. In February this year, a warning came from a partner handling debit card transactions for Polymarket US: a large number of fraudsters had flooded the platform. The bad actors bound stolen debit cards to Polymarket US accounts, used the accounts to place bets, and then withdrew the funds to their own clean debit cards or accounts, attempting to walk away with at least $10 million. During the incident, the payment provider determined that more than 80% of deposit transactions were fraudulent—far above the industry norm of about 1%. Insiders said Polymarket employees immediately reported this risk to CEO Shayne Coplan. Recalling Coplan’s response, the compliance team said they were shocked: “Keep expanding. If the regulators find any problem, we’ll pay the fine anyway.” Current and former Polymarket employees said that this statement—never publicly reported before—reflected Coplan’s business approach for Polymarket: pursue growth at any cost. (The Wall Street Journal) Current and former employees and investors interviewed said the high-profile company has been going all-in to attract new users and investors, but along the way, compliance gaps, legal disputes, and software glitches have repeatedly emerged. Insiders said that after the February attack, the platform’s fraud rate did not rise back to 80%, but it stayed high for several consecutive months. After the incident, multiple executives left the company, which launched an internal investigation. Former regulators from the CFTC, the Department of Justice, and the IRS said the extent of this attempted fraud and Polymarket’s response are rare in the commodities and gambling industries. Unlike traditional commodity exchanges, Polymarket directly receives retail customer funds, making it more vulnerable to fraud attacks. Former CFTC trial lawyer Joe Konizeski said: “In a regulated space, this doesn’t happen. Professionals handle customer funds and ensure both the source of funds and the disposition of funds follow the rules.” A Polymarket spokesperson said the company is committed to maintaining accurate, fair, and transparent markets, and is actively cooperating with regulators and law-enforcement agencies. “Our market integrity mechanisms include processes related to detecting, verifying, and handling suspicious activity.” Polymarket faces increasing legal lawsuits on multiple fronts. The U.S. Commodity Futures Trading Commission has filed suit against it, and insiders say the company has notified employees to preserve records related to the fraudulent attack and other matters. The New York City Council is conducting a wide-ranging investigation into Polymarket and other prediction-market platforms. In the past couple of decades, nearly 20 traders have filed lawsuits accusing Polymarket of deceptive business practices. At the same time, more than ten state-level lawsuits focus on a core question: whether Polymarket and competitors like Kalshi are unlicensed gambling platforms. The outcomes of these cases could reshape the entire industry landscape. As legal risks continued to accumulate while Polymarket CEO Shayne Coplan pushed for rapid company growth, Coplan was pursuing a new $1 billion funding round. After the round closes, the company’s valuation will be about $21 billion. A fund affiliated with former President Donald Trump, 1789 Capital, will participate; the fund previously invested roughly $200 million in Polymarket. Polymarket has data collaboration with Dow Jones, its parent company (The Wall Street Journal). The company is currently working to reshape its image to investors and the public—building itself into a mature enterprise pursuing steady growth. Insiders involved in operations said that starting in May, the company gradually hired experienced risk-control personnel, including a former FBI agent, while also strengthening compliance processes and optimizing product testing. Insiders said that by the end of June, Coplan traveled to the Hampton residence of 1789 Capital co-founder Omeed Malik to discuss strategies to further完善 Polymarket’s internal operations ahead of a potential IPO next year. Malik advised Coplan to hire more seasoned executives. Recently, Polymarket appointed its first-ever Chief Financial Officer, Warren Jenson. He previously served as Amazon’s CFO in the early 21st century. (The Wall Street Journal) After investigative reporting about Polymarket’s social-media betting business was published, the company reorganized its marketing team and hired the founder of electric scooter company Bird to serve as head of growth. Other marketing employees involved in social-media marketing projects have either left or had their responsibilities scaled back. A company spokesperson said: “Polymarket is growing fast and improving every day. We’re proud of our new core leadership hires and the continuous upgrades to our infrastructure. At the forefront of finance, technology, and culture, we have scaled our business—and we remain committed to responsible growth.” Coplan, 28, has long been outspoken and forceful, and has reprimanded employees in the office. Former employees said employees typically had to work late and that Adderall (note: a central nervous system stimulant, a psychiatric medication) is quite common within the company. Several former employees said Coplan repeatedly urged engineers to iterate through and deliver new-feature lists, with requirements changing frequently. (The Wall Street Journal) A review of recorded messages showed that last July, while discussing how to resolve disputes over betting results, Coplan said: “Bro, this is absolutely stupid! You guys keep complaining about this little thing—it’s absurd.” As early as after Polymarket reached a settlement with federal regulators in 2022, it was banned from offering its international platform to users in the U.S. In 2024, as Polymarket’s profile grew, two federal agencies began investigating whether the company violated the settlement agreement and allowed U.S. traders to log in. Around the same time, an office prankster placed life-size cardboard cutouts of Sam Bankman-Fried, a crypto fraudster serving time. The joke partly stemmed from the fact that Coplan, who is also a billionaire in the crypto industry, bears some facial resemblance to Sam Bankman-Fried. After Polymarket was banned from offering its international platform to U.S. users, Coplan told employees to prepare to return to the U.S. market. Coplan asked the team to prepare for a return to the domestic U.S. market. Polymarket is paving the way for its U.S. app and negotiating with regulators to wrap up related investigations. Last summer, the company spent $112 million to acquire a licensed exchange and retool it into Polymarket US. Polymarket US opened to early users in December. Insiders said large numbers of traders poured into the platform, with total account deposits exceeding $500 million. As one of its anti–money laundering safeguards, Polymarket US uses the same general rules used by financial exchanges: funds must be deposited from a particular payment channel, and withdrawals must return to the same channel. Without this rule, fraudsters could use reloaded stolen debit cards, complete transactions, and then withdraw profits to a clean debit card. Federal regulations do not require prediction markets to follow this rule. Other brokers and gambling apps, including DraftKings and FanDuel, comply with it. Polymarket’s main competitor, Kalshi, does not apply this rule, but insiders said Kalshi would verify withdrawals across channels and freeze suspicious payments. Fraud warning. In January this year, Polymarket’s U.S. app trading volume accounted for only a small portion compared with the huge international platform: betting volume was under $300 million, while the international platform exceeded $7.6 billion. Even though the app is still in beta and only available to limited users, Coplan hoped to remove as much friction in the user experience as possible. One of his top priorities: ensure users can withdraw quickly. By February, complaints about slow withdrawals flooded Polymarket’s Discord community. Staff told users that the funds were being processed, but compliance review could delay withdrawals by days or even weeks. Engineering glitches in the U.S. app further worsened the withdrawal problem. Before the November 2025 mayoral election in New York, Polymarket ads appeared on New York streets. In February, payment service provider Checkout.com told Polymarket that fraudsters launched attacks by binding stolen debit cards to thousands of new accounts. Insiders said most top-up attempts failed, and the attack mainly came from seven users, one of whom attempted about 4,000 top-ups. Checkout.com still works with Polymarket and refused to comment on the incident or on the companies’ partnership. The attack overwhelmed the compliance team and further aggravated the withdrawal backlog. Insiders said that to speed up returning funds to users, company management decided to cancel the same-channel withdrawal rule, despite warnings from some employees that this would open a loophole for money laundering. Executives believed that other existing safeguards would be sufficient to handle the risk. A former federal prosecutor said that if money-laundering activities were not sufficiently controlled, it could violate federal anti–money laundering, illegal funds-transfer, and even bank fraud-related laws. The CFTC and the Department of Justice have previously brought related lawsuits against multiple companies, including several crypto exchanges, with some cases involving fines of hundreds of millions of dollars. By contrast, the anti–money laundering regulatory requirements applicable to Polymarket were relatively lax. Insiders said that Polymarket US’s chief compliance officer, Andrew Clifford, resigned after submitting a lengthy report in April detailing the fraud issues. Both Andrew Clifford and Polymarket declined to comment on his resignation. Around the same time, Polymarket completed a $1 billion funding round, with a company valuation near $15 billion, with investors including the Trump-linked fund. Not long after, Polymarket fired the CEO of its U.S. unit, Justin Hertzberg, and the head of U.S. regulatory affairs and the anti–money laundering lead also left the company. Justin Hertzberg did not respond to requests for comment. Insiders said an investigation by the law firm Sullivan & Cromwell concluded that the company’s operations complied with regulations. One insider said that by May, by limiting how many debit cards a single account could bind, and by introducing a new anti-fraud service provider, Riskified, the platform’s fraud rate fell back to normal industry levels. A highly controversial new market. Polymarket is also working to fix a variety of issues caused by the rushed rollout of new features. Former employees said the company often pushes updated versions to users without sufficient testing. Engineers raised objections, suggesting that Coplan should prioritize fixing existing platform vulnerabilities. At times, when engineers objected, Coplan had them directly develop new features using AI. A man in New York said that after the platform app crashed in July, $950 disappeared from his account. A woman in California said that $1,500 had been stuck and could not be withdrawn from her account. A 22-year-old user in Massachusetts reported that his account was locked; dozens of contacts to customer service went unanswered, and waiting weeks still brought no response from the company. Insiders said Polymarket has compensated some affected customers, while other customers worked with their banks to recover unauthorized funds. In addition, the company recently improved its code review process and hired more engineers. Coplan pushed the team to roll out a large number of high-profile new prediction markets. (The Wall Street Journal) A review of text-message records shows that he proposed opening such markets as “How many times will Kanye mention Jews on X this week?” and “Who will Elon insult again?” Those markets ultimately were not launched. In June, the company filed a trademark application for “Create Your Own Markets.” Former employees said this was part of Coplan’s long-term growth strategy, aiming to let users freely create prediction markets on any topic. Rajiv Sethi, a longtime professor of economics at Barnard College who studies prediction markets, said that giving users the ability to create markets on their own brings new risks of market manipulation. Polymarket has reached partnerships with several mainstream celebrities and sports stars, including NBA star LeBron James. Coplan wants to make Polymarket a national brand, so he is spending heavily on signing top-tier celebrities and sports stars, including LeBron James, and also reached a $300 million partnership with Major League Baseball. Insiders said that LeBron James’s team once told a prediction-market competitor about Polymarket’s terms: $20 million per year plus $50 million in equity. The final terms of the Polymarket deal could not be verified. Insiders said LeBron James currently does not hold any equity in Polymarket. Last autumn, Polymarket was in talks with music artist Drake for a partnership in the range of several tens of millions of dollars. A Polymarket spokesperson and Drake’s team said no final agreement was reached. But Drake later mentioned Polymarket and Coplan in his album (Iceman). Coplan attended a private album release party at a castle-like mansion in Toronto hosted by Drake. By the end of April, Polymarket launched a prediction market betting on whether Drake would mention “Polymarket” in his new album. A new account created shortly before the album’s release placed bets on only the album-related market and ultimately cashed out $7,800 in profit. Insiders and records reviewed showed that hours before the album release, Drake’s team played the album in advance to Polymarket employees. After staff heard the company name mentioned in the album, they took down the prediction market urgently due to insider-trading risk. A person involved in the partnership negotiations said that it’s hard to precisely measure the return on brand deals, but Coplan apparently didn’t care whether the partnerships would break even—he was focused on getting them finalized. When employees questioned whether the partnership offers were too high, Coplan responded: “I don’t even care.” Some executives at Intercontinental Exchange (ICE), Polymarket’s largest investor, said in interviews that they are concerned this prediction-market company has made multiple strategic errors. (The Wall Street Journal) A June report revealed that Polymarket paid influencers to post fake trading videos and also ran offshore-platform ads targeting U.S. users, which raised concerns at ICE and other investors. They worried the behavior might violate federal advertising regulations, and also violate the settlement agreement between Polymarket and the CFTC that prohibits providing offshore-platform services to U.S. traders. In late July, ICE disclosed in its quarterly report that it held $1.6 billion worth of Polymarket shares, representing 22% of the company’s outstanding shares. Another attack. In late July, nearly 500 Polymarket users suffered another fraud attack caused by an engineering defect. Insiders said the attackers used someone else’s personal information (such as a stolen Social Security number) to register new accounts without passwords or usernames, allowing them to directly take over the victim trader’s existing Polymarket accounts—along with the linked bank accounts and debit cards. The total stolen funds in this incident were not large. Polymarket’s female spokesperson said the company would reimburse users for all losses. Several users said in interviews and on the Discord community that they lost thousands of dollars each and sent a large number of messages to customer service, but received no response for weeks. However, in July, a Polymarket employee on Discord said the engineering team was fixing the issues for affected users. Dane Collins, 26, said he started using Polymarket US to bet on the World Cup in May. Previously, Kalshi had been barred by a court order from providing sports gambling services in his home state of Michigan. When he logged into his account in July, he found that all his bets had been closed out, and $5,783.51 in winnings had been withdrawn to a debit card that was not his. Polymarket added $25 to his account without any explanation. Dane Collins has filed police reports with local law enforcement, the FBI, and the CFTC. “Polymarket US hasn’t responded to me for weeks,” he said. After he submitted identity verification materials twice, the platform froze his account and made no mention at all of the missing funds.
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