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Acting Director of Enforcement Vincent McGonagle said: “All derivatives markets must operate within the bounds of the law regardless of the technology used.
New York-based crypto prediction platform Polymarket has reached an agreement with the Commodity Futures Trading Commission (CFTC) to pay a $1.4 million fine.
Polymarket is a decentralized platform that allows users to bet on the outcomes of event markets such as professional sports games and political elections through binary options contracts.
On January 3, the CFTC announced that it had entered an order to file and concurrently settle charges against Polymarket, with the platform being found to have been operating an “illegal unregistered or unapproved office” as of June 2020.
Under the order, Polymarket must pay a $1.4 million civil fine along with the revocation of any marketplace on the platform that fails to comply with CFTC and Commodity Exchange Act (CEA) regulations. Polymarket responded with a tweet on January 4 saying it was “excited to move forward”.
The CFTC states that event market contracts backed by a binary options pair “constitute swaps” under its jurisdiction, and that platforms providing market exposure must be regulated according to its jurisdiction. CFTC and CEA.
In the announcement, CTFC acting director of enforcement Vincent McGonagle urged derivatives platforms to register with the enforcement agency, paying particular attention to those operating in the decentralized finance (DeFi) sector. :
“All derivatives markets must operate within the bounds of the law regardless of the technology used, and in particular include those in the so-called decentralized finance or ‘DeFi’ space. .”
However, the CFTC did note that Polymarket received a reduced civil monetary penalty for its “substantial cooperation” with the investigation of the platform.
Cointelegraph reported back in October 2021 that the CFTC had opened an investigation into Polymarket, with the platform allegedly hiring former CTFC enforcement director James McDonald to handle the investigation.
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