In short
- Senators are looking for answers from CFTC Chairman Michael Selig on the Polymarket securities fraud.
- Lawmakers are “concerned” the regulator is not enforcing the law properly and cannot provide consumer protection.
- The senators’ letter adds more scrutiny to the prediction markets and past allegations of insider trading.
Two senators want answers from the Commodities Futures Trading Commission soon Wall Street Journal report, who he said that Polymarket paid for making $1.9 million in bogus bets as part of an advertising campaign.
In a letter to CFTC Chairman Michael Selig, Congressmen Adam Schiff (D-CA) and John Curtis (R-UT) sought answers to six questions, including whether the CFTC is investigating the allegations and whether the regulator believes it has the power and ability to implement the same safeguards as other regulators.
“The CFTC has repeatedly asserted its authority to regulate futures markets and derivative contracts, including through its own practices and rules for the regulation of derivatives markets registered with the CFTC,” the senators wrote.
“However, since developers present prediction markets as ‘free money,’ there is no reason to treat them any differently than gambling,” he added.
Predictive trading platforms like Polymarket have been on fire all year as the CFTC confirmed that it is a regulator of the growing industry. Some countries say that Platforms are engaged in anti-gambling activitieswhen other issues arise related to insider trading claims.
The latest report, which claims that developers have entered into sales in the fake version of Polymarket to create interest on the platform, only adds to the great scrutiny.
“This shows why the agency should question claims that sports, entertainment, and other betting contracts are fundamentally different from gambling because they are offered through event contracts,” they wrote.
“With the promise of quick money, aggressive marketing, online influence, and a willful lack of understanding of reality and performance, it’s no wonder that Americans view buying contracts in the prediction markets as closer to gambling than investing,” he added.
The two, who said they are “concerned” the CFTC is not following the rules that lead them, asked to answer their questions by July 10.
On the report in question, a representative of Polymarket told a WSJ will conduct a thorough investigation of its marketing materials.
On Friday, The Wall Street Journal reported that the CFTC is in the midst of an “ongoing, intensive investigation” into Polymarket—but it’s unclear whether the investigation will focus on the trading platform.
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