CFTC probes Polymarket over $800M oil bets

Commodity Futures Trading Commission is reportedly investigating Polymarket over approximately $800 million in oil-related prediction markets tied to allegations of insider trading.

The investigation centres on claims that a small group of traders may have used advance knowledge of US military operations to place profitable bets on oil price movements before geopolitical events became public.

Research cited in the investigation suggested roughly 3% of traders account for the majority of prediction market volume and accuracy, raising questions about whether some participants benefit from privileged information.

The probe could become a major regulatory test for whether crypto-based prediction markets qualify as event-based swaps or binary options, both of which fall under CFTC oversight in the United States.

Polymarket previously settled with the CFTC in 2022 after the regulator fined the platform’s parent company $1.4 million for operating an unregistered event-based swap facility.

The company later geofenced US users and repositioned itself as an international platform, although regulators are reportedly examining whether those restrictions effectively prevented American participation.

Analysts said the investigation could trigger stricter know-your-customer rules, stronger geo-blocking requirements and broader regulatory changes across the crypto prediction market industry if the CFTC pursues formal enforcement action.