The Commodity Futures Trading Commission (CFTC) has reportedly issued a subpoena to U.S.-based cryptocurrency exchange Coinbase, seeking customer data in connection with the crypto-based prediction market platform Polymarket.
According to a customer notice shared by EthHub co-founder Eric Conner on January 8, Coinbase informed users of the subpoena and its potential implications.
The notice stated that Coinbase is required to provide general customer information to the CFTC unless users file a legal motion to prevent the disclosure by January 15, 2025.
Coinbase Says it Might Share Requested Data with CFTC
Coinbase clarified that no immediate action was required from users but indicated it might share the requested data if the subpoena is not contested.
“We write to inform you that Coinbase has been served with a subpoena in the above-referenced matter seeking general customer information that includes information related to your account,” the notice read.
The CFTC’s move follows heightened scrutiny of Polymarket, particularly after the FBI raided the home of its CEO, Shayne Coplan, in mid-November 2024.
The investigation intensified after cryptocurrency investors reportedly earned millions of dollars by betting on Donald Trump’s victory in the November 5, 2024, U.S. presidential election through Polymarket.
Some users reportedly won as much as $50 million from these bets.
Concerns over potential manipulation of Polymarket’s decentralized prediction market have surfaced, drawing attention from regulators.
France’s Autorité nationale des jeux launched its own investigation into Polymarket’s compliance with gambling laws shortly after Trump’s election win.
Polymarket, headquartered in New York, has been inaccessible to U.S. residents since 2022 due to a $1.4 million settlement with the CFTC.
The settlement accused Polymarket of operating an unregistered derivatives trading platform.
However, reports suggest that some U.S. users have bypassed the geo-blocking measures using VPNs to place bets.
CFTC Warns of Potential Manipulation in Prediction Markets
In September, the CFTC warned about the susceptibility of prediction markets to manipulation in its latest filing against Kalshi.
The agency mentioned examples of recent manipulative actions on competitor platforms, suggesting that Kalshi’s markets could face similar issues.
One example involved traders on Polymarket attempting to manipulate contracts related to Vice President Kamala Harris’ potential victory in the 2024 U.S. presidential election.
Additionally, a fabricated poll on PredictIt, showing musician Kid Rock leading Senator Debbie Stabenow in a senate race, significantly impacted the pricing of contracts for Stabenow’s reelection.
Kalshi, which allows users to bet on election outcomes, had previously faced legal challenges from the CFTC.
Last year, leading financial data and news service provider Bloomberg LP revealed that it aims to incorporate election odds data from the crypto betting platform Polymarket into its widely used Terminal.
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