The FBI raided the home of the head of cryptocurrency platform Polymarket. What’s this about?
FBI agents raided the home of the CEO of betting platform Polymarket, Shane Coplan, tonight. During the searches, his phone and other electronics were seized. However, Coplan himself was not arrested – the FBI representatives woke him up in the morning and demanded to hand over the necessary devices for examination. The reason for these actions could be a possible prosecution by the U.S. Department of Justice, because Polymarket allegedly provides illegal services to citizens of the United States.
Polymarket is a decentralised platform where users can bet on the outcome of real-world events like elections, economic indicators, sports and more. It operates on the basis of a smart contract in blockchain, which guarantees transparency and automation of transactions.
Polymarket platform homepage
Betting on Polymarket is the buying and selling of positions based on the probability of certain events occurring. Users buy contracts that become profitable or unprofitable depending on whether the event occurs or not. The price of the contract varies from 0 to 1 dollar, and the closer the value is to one, the higher the probability that the event will occur.
If the user is confident of the outcome, he can buy the contract at the current price, which will reflect the likely outcome, or sell it later if market confidence changes in his favour. After the event occurs, the contract pays $1 per share to the winning side. The losers lose everything.
Volumes of transactions on Polymarket
Polymarket has become especially popular as the US presidential election is approaching. The volume of bets on this event totalled billions of dollars, which attracted attention to what was happening on the platform.
It is important to note that Trump’s chances of winning on Polymarket shortly before the election exceeded the 60 per cent level. This was well above the results of national polls, some of which, among others, showed a tiny lead for Kamala Harris.
The probability of victory of candidates in the US presidential election according to Polymarket data on election day
In the end, the balance of power on the platform turned out to be correct, and Trump won all the swing states, among others. And because of this, the head of Polymarket got into trouble.
What happened to the head of Polymarket?
According to The Block’s sources, this is not the first time a decentralised platform involving cryptocurrencies has faced pressure. In early 2022, Polymarket settled a dispute with the Commodity Futures Trading Commission (CFTC) by paying a $1.4 million fine. The platform was found guilty of offering binary options based on real events to US citizens. Since then, Polymarket has not officially operated in the US market.
The popularity of Polymarket increased sharply against the background of the election campaign in the United States. The volume of bets on the election results exceeded the $3 billion mark.
On 6 November, the platform officially closed trading, recognising Donald Trump as the newly elected president on the basis of the first reports on the vote count. Shortly before this event, Polymarket was also accused of manipulating public opinion.
Polymarket CEO Shane Coplan
The fact is that closer to the elections the gap between the probability of victory of candidates on Polymarket and in official polls of the population began to increase rapidly. A part of large users of Polymarket made a big bet on Donald Trump, which turned him into a much more popular candidate in comparison with Kamala Harris in the eyes of other users.
However, this is only a consequence of the activity of traders who were ready to bet millions of dollars on this or that outcome of events. Well, no evidence of the attitude of the platform management was found, in addition, its representatives repeatedly stated that they remain politically neutral against the background of the approaching vote.
The New York Post contributor Taylor Herzlich noted that Coplan was “awakened by U.S. law enforcement officers at 6 a.m. at his Soho home, demanding his phone and other electronic devices”.
Popular cryptocurrencies
The FBI raid and seizure of electronics Shane Coplan commented on Twitter. In doing so, he admits that there is a political motive for the current US presidential administration in what is happening. Here’s a quote.
It’s frustrating that the current administration is trying its last ditch effort to go after companies they believe are linked to political opponents. We are deeply committed to non-partisanship and today is no different. However, incumbent presidents should engage in introspection and recognise that a more proactive stance on business and startups could have changed their fortunes in this election.
A source close to the case called the Coplan incident “grand political theatre.” The Cointelegraph quoted Cointelegraph as saying.
They could have asked his lawyer for any of these things. Instead, they staged a so-called raid so they could then leak the information to the media and use it for obvious political reasons.
Trump will be inaugurated on 20 January 2025, and until then, Democrat Joe Biden is still president of the United States. That is, Coplan admits that the FBI raid had a political motive, since Polymarket played a significant role in shaping public opinion regarding the election.
Former US President Donald Trump at the Bitcoin 2024 cryptocurrency conference
Co-founder and former head of cryptocurrency exchange Kraken Jesse Powell, who also faced pressure from US regulators as platform manager, shared a comment on the situation on Twitter.
Having experienced it all first hand:
1. Lawyer likely recommends silence;
2. The search warrant was probably issued with a specific criminal article;
3. It is alleged that the evidence could be on any electronic device, so they take all electronics and can hold them for up to five years without charges. Of course, this is a horrifying practice in an age where everything is digitally tied;
4. It remains a mystery what exactly was presented to the court to approve the warrant – it probably won’t be known until a long time later, if at all;
5. It is also unknown whether there are other secret (FISA) warrants to monitor his online accounts and surroundings.
After the event, Twitter users recalled a photo from the second half of October 2024. Back then, Coplan attended a speech by Kamala Harris in New York City where she was raising campaign money.
He was also photographed with Tim Walz, who was running for the Democratic nomination for vice president of the United States.
Photo of Polymarket executive Shane Coplan and US vice-presidential candidate Tim Walz
Coplan's position is hard to envy. Still, he has faced government pressure despite positioning the platform as neutral. Now it appears that he is being held accountable for the actions of platform users who shared their own expectations of the election in the form of bets.
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