Leading decentralized prediction market Polymarket has dismissed its chief marketing officer, Matthew Modabber, who was also a close friend of the company's chief executive, Shayne Coplan, after an internal investigation into several instances of misconduct, including an alleged scheme involving fake trades, according to a report in the New York Post.

The termination came after an internal probe into several embarrassing episodes, among them a reported scheme built on fake trades, that had worried investors, the Post reported, citing unnamed sources familiar with the matter. According to one source, the firm is finalizing a separation agreement with Modabber, who had served as chief marketing officer since January 2024.

CoinDesk has reached out to Polymarket for comment.

CFTC investigating alleged fake-trades webpage

One of the alleged episodes of misconduct was first reported in June by The Wall Street Journal, which said Modabber's team had built a webpage designed to highlight videos of Polymarket users making money on fake trades. The U.S. Commodity Futures Trading Commission subsequently opened an investigation into the matter, and that inquiry remains ongoing; so far, no wrongdoing has been proven.

The CFTC is the federal agency responsible for regulating U.S. derivatives markets, including the event contracts that prediction markets offer, which places the probe in the same regulatory arena that governs how platforms in this sector operate.

Polymarket told the Journal at the time that it was "committed to maintaining accurate, fair, and transparent markets."

Friendship complicated the dismissal

The decision to fire Modabber was complicated by his friendship with Coplan, which stretches back to the pair's high school days, according to the Post. One source said an "irate" Coplan at one point threatened to fire members of the legal team pursuing Modabber's termination, though he later accepted that parting ways was best for the company.

Polymarket's board concluded in recent weeks that Modabber was hindering the company's efforts to improve the prediction market's image as it considers a potential initial public offering, according to the Post. The board includes Coplan himself, crypto investor Nick Tomaino, lawyer Alex Spiro and an unnamed partner at venture firm Founders Fund.

Governance and regulatory posture are among the areas companies weighing public listings typically have to address, and with the CFTC inquiry still open and the separation agreement not yet finalized, both stand out as unresolved threads in that process.

About Polymarket

Polymarket operates a prediction market platform where users bet on the outcome of real-world events, ranging from elections and sports to the weather and the Oscars. The platform runs on crypto and blockchain technology and gained widespread notoriety in the run-up to the 2024 U.S. presidential election, when its odds were widely quoted. Coplan, 28, became the country's youngest billionaire as a result, according to the Post.