The Commodity Futures Trading Commission is investigating whether Polymarket violated the terms of a 2022 enforcement settlement by letting American users trade on its platform, according to Reuters reporting published earlier today. The probe revives an inquiry the agency closed in 2025 without filing charges. A settlement-compliance probe is a distinct question from a fresh violation: it asks whether the commitments that let the platform keep operating were actually kept. For a platform that has worked to fit prediction markets within US law, the question strikes at its core.

Polymarket settled with the CFTC in January 2022 and paid a $1.4 million penalty for offering event-based binary options without registration. Under that agreement, the company committed to blocking American users from its offshore exchange. Geofencing tools followed, but regulators and critics pointed to traders who reached the site through VPNs. The platform has also courted crypto natives, adding bitcoin deposits in October 2025 as part of a broader push to fund accounts with digital assets.

According to the sources, investigators are examining three areas: the adequacy of Polymarket's location controls, its advertising inside the United States, and the onboarding and customer protections on its US platform, which launched late last year. Together, the areas span both sides of the company: the walls around its offshore exchange and the practices of its newest US-facing business.

The company is headquartered in New York and runs its offshore exchange through a Panama-registered entity. A probe is an inquiry, not a finding, and many investigations end without enforcement. Whether this one ends like the 2025 review — closed with no charges — or produces a fresh enforcement action remains open.

Polymarket's mounting regulatory scrutiny

The inquiry sits inside a wider effort. In June, the Wall Street Journal reported that Polymarket paid individuals to produce videos of fictitious winning bets, and senators Adam Schiff and John Curtis urged the agency to open a probe. Bloomberg reported that investigators were examining the company's social media activity.

CFTC Chairman Michael Selig has framed prediction markets as tools for hedging and information discovery, and he has argued that federal regulators, not states, should oversee them. Enforcement director David Miller has pledged tough policing of the sector. The combination — a chairman promoting the category while his enforcement chief vows scrutiny — sets the backdrop for the reopened probe.

Enforcement pressure has a test case. In April, prosecutors charged a US soldier, Gannon Ken Van Dyke, with making $400,000 from insider bets on the offshore platform, per the Justice Department announcement. The indictment says he used a VPN and an “exit mode” that appeared to sit in a foreign country — the access method regulators and critics have flagged as geofencing's weak point. Van Dyke has denied the charges, and Polymarket says it referred the matter to authorities.

Scale raises the stakes. Intercontinental Exchange, the parent of the NYSE, agreed in October 2025 to invest roughly $2 billion, and Bloomberg counted founder Shayne Coplan, 27, among the youngest self-made billionaires. The bigger the platform, the more its geographic walls matter.

Earlier this year, Polymarket's five-minute Bitcoin up/down contract was exploited by a small group of traders who pushed Binance's price in the final seconds before each close, according to a study. Just 821 wallets, about one in 300 traders, took $8.2 million in the pushed cycles, and 93% of the losses fell on retail bettors.

The study's authors found no manipulation in the fifteen-minute contract, since a longer window dilutes a fixed push — a lesson that matters now that Nasdaq and Cboe have filed to list similar binary contracts on equity indices. With those filings pending, Polymarket's own compliance record is under review even as established exchanges seek to offer comparable products.

This article was originally published on Bitcoin Magazine and written by Micah Zimmerman.