Polymarket is under the scanner once again in light of allegations that fraudsters have used hacked debit cards to conduct transactions worth over $10 million on the United States-based platform Polymarket in February.
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As reported by The Wall Street Journal, the hack has been carried out in such a manner that the fraudsters have linked their hacked payment cards to several accounts on Polymarket and placed bets through them.
It seems that the level of activity has reached such a high level that even the payment processor of Polymarket, Checkout.com, had to act. At one stage, almost 80% of all transactions made through the service were flagged as possible scams. This number is significantly higher than the 1% fraud rate mentioned by the industry as the benchmark.
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Polymarket Fraud Concerns Reach Executive Level
Fraud activities mentioned were also raising concerns for the Polymarket’s compliance team.
According to sources at The Wall Street Journal, the company’s compliance team was raising red flags regarding the increasing number of suspicious transactions with Coplan, the company’s CEO.
According to allegations, Coplan told the team to keep working and deal with penalties, if any, from the regulatory body.
Nevertheless, Polymarket has never officially acknowledged that Coplan ever made such an assertion. The firm has stated that it has mechanisms in place to identify and handle any suspicious activities in accordance with regulatory requirements and laws.
More importantly, the $10 million cited in the report is the total amount that was attempted to be moved on the platform. It does not imply that there was any loss of up to $10 million by Polymarket or its clients.
Polymarket Strengthens Fraud Controls
However, according to the information, the issue of payment problems had persisted for quite some time even after the February event, although the rejection rates had become more regular by May. Some new measures have been taken by Polymarket to enhance its payment controls.
One such measure is a restriction on the number of debit cards that can be linked to the accounts. Polymarket has also engaged a company named Riskified to prevent any suspicious activity.
Additionally, Visa was reported to be urging payment processors to ramp up screening efforts following the rise in transaction disputes. The events have brought more scrutiny on the payment networks utilized by the prediction market platforms, especially as they grow their US businesses.
As for Polymarket, this topic becomes especially relevant due to the rapid growth of its US operations in the derivatives market.
CFTC Oversight Adds to Regulatory Pressure
The Polymarket US platform functions independently of its global blockchain platform, with QCX LLC listed as a contract market designated by the CFTC. Issues associated with the Polymarket platform are currently under investigation by the CFTC, with the February fraud being part of them.
In 2022, Polymarket paid $1.4 million to the CFTC as a result of selling unregistered event-based contracts. It is also under congressional inquiry for its customer identification and suspicious activities protocols.
Polymarket Greenland Market Draws Attention
The regulatory trends follow the increased interest that Polymarket has gained from politically motivated prediction markets.
Currently, one market predicts if the U.S. and Denmark will enter into any sort of agreement concerning Greenland by September 23, 2026. The latest Polymarket snapshot shows that there is an 83% chance of a positive result on September 23.
The agreement is narrowly construed as a formal agreement between Denmark and the US. According to Polymarket’s terms and conditions, announcements, discussions, and intentions are not enough for the trade to be considered an agreement.
The Greenland market is a good example of how prediction markets are playing an increasingly active role in monitoring significant political and geopolitical events. Meanwhile, the recent scandal involving fraud demonstrates that fast growth at Polymarket brings a lot of attention to its payment systems and regulations.
Since the investigation and inquiries regarding the February incident are still pending, the control of fraud may be a significant consideration for Polymarket, especially with its expansion into the United States.
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This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
