Polymarket US faced an attempted fraud scheme involving at least $10 million in stolen debit-card transactions earlier this year, as the prediction-market company worked to expand its regulated U.S. business.

In February, fraudsters linked stolen cards to thousands of Polymarket US accounts, deposited funds and attempted to move the money through wagers before withdrawing it to cards or accounts they controlled. At one point, payment processor Checkout.com rejected more than 80% of the deposits it handled as fraudulent, compared with an industry rate of roughly 1%. That gap shows the attempted scheme ran well above typical payment-fraud levels and underscores why payment-fraud controls became a central operational issue for Polymarket during its U.S. expansion.

Internal Controls Came Under Pressure

Polymarket initially required withdrawals to return to the same payment source used for deposits. That measure limited the ability to move stolen-card funds into separate accounts, but the safeguard was later relaxed as the company sought to improve its deposit and withdrawal experience. The trade-off reflects a recurring challenge in payments operations: reducing friction for legitimate users can also reopen pathways that fraud rings exploit.

People familiar with internal discussions described CEO Shayne Coplan as telling employees to continue prioritizing growth and deal with a regulatory fine later if one emerged. Compliance staff had raised concerns following the surge in rejected transactions.

The security issues extended beyond the stolen-card campaign. An engineering problem in July exposed nearly 500 accounts to potential takeover, creating another operational challenge as Polymarket expanded its U.S. platform.

The company had also faced scrutiny over its marketing practices. A separate investigation found that Polymarket paid creators to promote simulated trades using replicas of its trading interface. The company subsequently overhauled its marketing practices.

Polymarket Expands Compliance Team

Polymarket has since added senior personnel in compliance, surveillance and risk as its U.S. business scales. Megan McGrath, previously Robinhood’s chief compliance officer, now serves in the same role at Polymarket US. Former Nasdaq executive Paul Jordan joined the company as chief risk officer.

Shana Bautista, a former FBI official and Coinbase investigator, became Polymarket’s global head of investigations and intelligence. Bautista said in August that the company had the resources to investigate suspicious trading as activity builds ahead of the U.S. midterm elections.

Polymarket’s current market-integrity rules prohibit fraud, market manipulation and trading on stolen confidential information. Its U.S. exchange also uses the National Futures Association as a regulatory service provider for market surveillance.

Congress has separately increased scrutiny of prediction-market controls. House Oversight opened an investigation into Polymarket and Kalshi in May, seeking records related to identity verification, suspicious-activity referrals, market surveillance and the handling of nonpublic information — areas that overlap with the compliance, surveillance and risk functions Polymarket has been staffing up.

Polymarket is expanding its executive team as it prepares for a potential public listing and competes with Kalshi, Robinhood and other platforms for the rapidly growing U.S. event-contract market. The House Oversight records request, trading activity around the U.S. midterm elections and the competition with Kalshi and Robinhood are among the developments to watch as the company’s U.S. buildout progresses.

Source: Crypto Adventure.