"Just continue to expand, and if the regulators find issues, we can just pay the fines."

Written by: Katherine Long, Caitlin Ostroff, Neil Mehta

Translated by: Chopper, Foresight News

In February this year, a warning came from an organization handling debit card transactions for Polymarket's US betting platform: a large number of fraudsters had flooded the platform.

Criminals linked stolen debit cards to Polymarket US accounts, used these accounts to place bets, and then withdrew the funds to clean bank cards or accounts they controlled, attempting to steal at least 10 million dollars.

During the incident, the payment organization determined that over 80% of deposit transactions were fraudulent, a percentage far higher than the industry standard of about 1%. Insiders claim that Polymarket employees immediately reported this risk to CEO Shayne Coplan. The compliance team recalled that Coplan's response shocked them: just continue to expand, and if the regulators find issues, we can just pay the fines.

Current and former employees of Polymarket said that this statement, previously never publicly reported, reflected Coplan's business philosophy for Polymarket—seeking growth at any cost.

Current and former employees and investors interviewed by The Wall Street Journal stated that this rapidly growing company was making significant efforts to attract new users and investors, during which time it continuously faced compliance loopholes, legal disputes, and software malfunctions. Insiders stated that after the February attack, although the platform's fraud rate did not reach 80% again, it remained high for several consecutive months. Following the incident, multiple executives left the company, and an internal investigation was initiated.

Former regulators from the Commodity Futures Trading Commission (CFTC), the Department of Justice, and the IRS stated that the extent of the attempted fraud and Polymarket's response were rare in the commodities and betting industries. Unlike traditional commodity exchanges, Polymarket directly accepts retail funds, making it more susceptible to fraud attacks. Former CFTC enforcement lawyer Joe Konizeski stated, "Such things don't happen in regulated spaces. Professionals manage customer funds, ensuring that both the source and disposition of the funds comply with the regulations."

A Polymarket spokesperson stated that the company is committed to maintaining an accurate, fair, and transparent market and is actively cooperating with regulators and law enforcement. "Our market integrity mechanisms include processes for detecting, verifying, and dealing with suspicious activities."

Polymarket is facing an increasing number of legal lawsuits on multiple fronts. The CFTC has already initiated litigation against it, and insiders revealed that the company has warned employees to retain records related to the fraud attack and other matters. The New York City Council is conducting a broad investigation into Polymarket and other prediction market platforms, with nearly twenty traders filing lawsuits accusing Polymarket of deceptive business practices.

At the same time, more than a dozen state-level lawsuits are focused on a core issue: whether Polymarket and its competitors, such as Kalshi, qualify as unlicensed gambling platforms. The outcomes of these cases could reshape the entire industry landscape.

Polymarket CEO Shayne Coplan urges employees to maintain the company's rapid growth pace

As legal risks continue to accumulate, Coplan is pushing forward a new round of 1 billion dollars in financing, which, when completed, will value the company at about 21 billion dollars. The Donald Trump-backed investment fund 1789 Capital will participate in this round, having previously invested around 200 million dollars in Polymarket.

Polymarket collaborates with Dow Jones, the parent company of The Wall Street Journal, on data. The company is currently working to reshape its image with investors and the public, aiming to become a mature enterprise that pursues steady growth. Insiders reveal that since May, the company has been gradually hiring experienced risk management personnel, including a former FBI agent, while enhancing compliance processes and optimizing product testing.

Insiders stated that at the end of June, Coplan visited the home of 1789 Capital co-founder Omeed Malik in the Hamptons to discuss strategies for improving Polymarket's internal operations ahead of a potential IPO next year. Malik suggested that Coplan hire more seasoned executives. Recently, Polymarket appointed its first chief financial officer, Warren Jenson, who previously served as Amazon's CFO in the early 2000s.

After The Wall Street Journal published an investigative report on Polymarket's social media betting business, the company restructured its marketing team, hiring the founder of electric scooter company Bird as head of growth. Other marketing employees involved in social media marketing projects have either left or had their job responsibilities reduced.

A company spokesperson stated, "Polymarket is rapidly growing and improving every day. We are proud of the newly appointed core management team and the continually upgraded infrastructure, as we scale our business in the forefront of finance, technology, and culture while adhering to responsible growth."

The 28-year-old Coplan is known for being outspoken and assertive, having reprimanded employees in the office. Former employees stated that staff generally need to work long hours, and the use of Adderall (a central nervous system stimulant) is quite common within the company. Multiple former employees indicated that Coplan frequently urged engineers to iterate new feature lists, with demands changing often.

A recording reviewed by The Wall Street Journal reveals that last July, during a discussion about adjudicating betting disputes, Coplan bluntly remarked, "This is utterly stupid! You guys are complaining about this, it's ridiculous."

As early as 2022, after reaching a settlement with federal regulators, Polymarket was prohibited from opening its international platform to users in the United States. In 2024, as Polymarket's notoriety increased, two federal agencies began investigations to determine whether the company violated the settlement agreement by allowing U.S. traders to log into the platform.

Around the same time, an office prankster placed a life-sized cardboard cutout of Sam Bankman-Fried, a crypto fraudster currently serving a prison sentence, as part of the joke that he somewhat resembled Coplan, who is also a billionaire in the crypto industry.

After being prohibited from opening the international platform to U.S. users, Coplan informed employees to prepare for a return to the U.S. domestic market

Coplan demanded the team to prepare for re-entering the U.S. market. Polymarket is paving the way for a U.S. domestic application and negotiating with regulators to resolve the related investigations. Last summer, the company spent 112 million dollars to acquire a licensed exchange, transforming it into Polymarket US.

Polymarket US opened to early users in December. Insiders revealed that a large number of traders flooded the platform, with total account deposits exceeding 500 million dollars.

As an anti-money laundering measure, Polymarket US adopted a universal rule for financial exchanges: funds deposited from a specific payment channel must be withdrawn back to that channel. Without this rule, criminals could use stolen debit cards to deposit funds, and after completing transactions, withdraw profits to clean bank cards.

Federal regulations do not mandate prediction markets to implement this rule. Other brokers and betting applications, including DraftKings and FanDuel, comply with this rule. Polymarket's main competitor, Kalshi, does not enforce this rule, but insiders stated that Kalshi checks cross-channel withdrawal behaviors and freezes suspicious payments.

Fraud Warning

In January this year, Polymarket's U.S. application transaction volume accounted for only a small portion compared to the massive international platform: the betting scale was less than 300 million dollars, while the international platform exceeded 7.6 billion dollars.

Although this application is still in the beta testing stage and only open to a limited number of users, Coplan hopes to eliminate user experience friction as much as possible. One of his primary demands: to ensure that users can withdraw quickly. By February, Polymarket users' Discord community was filled with complaints about slow withdrawals. Staff explained to users that the funds were being processed, but compliance audits could delay withdrawals by several days or even weeks. The engineering faults of the U.S. application further exacerbated the withdrawal difficulties.

Polymarket advertisements appear on the streets of New York ahead of the mayoral election in November 2025

In February, payment service provider Checkout.com informed Polymarket that fraudsters had attacked, linking stolen debit cards to thousands of new accounts. Insiders stated that most recharge attempts failed, and this attack mainly originated from seven users, one of whom attempted to initiate about 4,000 recharge transactions. Checkout.com is still collaborating with Polymarket and refused to comment on this incident and the partnership.

This attack overwhelmed the compliance team, worsening the backlog of withdrawals. Insiders revealed that to expedite fund returns for users, management decided to cancel the same-channel withdrawal rule, despite warnings from some employees that this move would open a loophole for money laundering. Executives believed that existing protective mechanisms were sufficient to mitigate risks.

A former federal prosecutor stated that failing to effectively control money laundering activities could violate federal anti-money laundering, illegal fund transfer, and even bank fraud laws. The CFTC and the Department of Justice have initiated related lawsuits against multiple companies, including several crypto exchanges, with some fines reaching hundreds of millions of dollars. The anti-money laundering regulatory requirements applicable to Polymarket are relatively lenient.

Insiders revealed that Polymarket US's chief compliance officer, Andrew Clifford, resigned after submitting a lengthy report detailing fraud issues in April. Both Andrew Clifford and Polymarket declined to comment on his departure.

Around the same time, Polymarket completed a round of 1 billion dollars in financing, bringing the company's valuation close to 15 billion dollars, with investors including Donald Trump's fund.

Shortly thereafter, Polymarket fired the CEO of its U.S. division, Justin Hertzberg, and the U.S. regulatory officer and anti-money laundering chief also left successively. Justin Hertzberg did not respond to requests for comment. Insiders stated that a law firm, Sullivan & Cromwell, conducted an investigation and concluded that the company's operations complied with regulatory rules.

One insider stated that by May, through limiting the number of debit cards that could be linked to a single account and introducing a new anti-fraud service provider, Riskified, the platform's fraud rate dropped back to normal industry levels.

A Controversial New Market

Polymarket is also working to fix various issues caused by the rushed launch of new features. Former employees disclosed that the company often pushed updates to users that had not been adequately tested. When engineers raised objections and suggested prioritizing the repair of existing platform vulnerabilities, Coplan sometimes directed engineers to directly use AI to develop new features.

A New York man stated that after the platform crashed in July, his account lost 950 dollars without a trace. A California woman reported that 1,500 dollars in funds had been unable to be withdrawn from her account. A 22-year-old user from Massachusetts reported that his account was locked and he received no response after dozens of attempts to contact customer service, waiting for weeks without hearing back from the company.

Insiders stated that Polymarket has compensated some clients who suffered losses; other clients worked with banks to recover unauthorized funds. Additionally, the company has recently improved its code review processes and hired more engineers.

Coplan is promoting the launch of a large number of eye-catching new prediction markets. Text messages reviewed by The Wall Street Journal show that he once proposed establishing such markets: "How many times will Kanye mention Jews this week on platform X?" and "Who will Elon insult next?" These markets ultimately did not go live. In June, the company applied for a trademark for "Create Your Own Market." Former employees indicated that this is part of Coplan's long-term growth strategy, aiming to allow users to freely open prediction markets on various themes.

Barnard College economics professor Rajiv Sethi, who has long researched prediction markets, stated that opening up user-generated markets could bring new risks of market manipulation.

Polymarket collaborates with several top stars and sports celebrities, including NBA star LeBron James

Coplan aims to turn Polymarket into a national brand, for which he is spending heavily and signing deals with top celebrities and sports stars, including LeBron James, and has secured a 300 million dollar partnership with Major League Baseball. Insiders stated that LeBron James's team informed a competitor in the prediction market that Polymarket's offer was 20 million dollars per year plus 50 million dollars in equity. However, the final terms of the collaboration with Polymarket could not be verified. Insiders revealed that LeBron James currently does not hold any equity in Polymarket.

Last fall, Polymarket negotiated a multi-million dollar deal with musician Drake. Polymarket's spokesperson and Drake's team stated that both parties ultimately did not sign a contract. However, Drake later mentioned Polymarket and Coplan in his album "Iceman." Coplan attended a private album launch event hosted by Drake in a castle-style mansion in Toronto.

At the end of April, Polymarket launched a prediction market betting on whether Drake would mention "Polymarket" in his new album. An account created shortly before the album's release, betting only on album-related markets, ultimately cashed out 7,800 dollars in profits. Insiders as well as data reviewed indicated that hours before the album release, Drake's team played the album for Polymarket employees in advance; upon hearing the company name mentioned in the album, staff, considering the risks of insider trading, urgently took down the prediction market.

A person involved in the collaborative negotiations stated that the return on brand partnerships is difficult to measure accurately, but Coplan seems unconcerned about whether the partnerships can recoup their costs, only focused on sealing the deals. When employees questioned the high collaboration pricing, Coplan responded, "I don't care at all."

Some executives from Polymarket's largest investor, Intercontinental Exchange (ICE), expressed concern in interviews that this prediction market company has committed multiple strategic mistakes. A June report by The Wall Street Journal revealed that Polymarket paid to have influencers publish false trading videos and also advertised its offshore platform to U.S. users, raising alarm bells for ICE and other investors, who are worried that this behavior violates federal advertising regulations and the settlement agreement Polymarket reached with the CFTC, which prohibits providing offshore platform services to U.S. traders.

At the end of July, ICE disclosed in its quarterly report that it holds 1.6 billion dollars in Polymarket shares, accounting for 22% of the company's issued shares.

Another Attack Incident

In late July, nearly 500 Polymarket users suffered another fraud attack stemming from engineering flaws. Insiders explained that when attackers used others' personal information (such as stolen Social Security numbers) to register new accounts, they could directly take over existing Polymarket accounts and linked bank and debit cards without needing passwords or usernames. The total amount of stolen funds was not large.

A female spokesperson for Polymarket stated that the company would compensate users for all lost funds.

Multiple users reported their losses of thousands of dollars during interviews and in the Discord community, sending numerous messages to customer service, with no reply for weeks. However, a Polymarket employee stated in July on Discord that the engineering team was fixing related user issues.

26-year-old Dane Collins stated that he started using Polymarket US to bet on the World Cup since May. Previously, Kalshi had been prohibited from offering sports betting services in his home state of Michigan due to a court injunction. When logging into his account in July, he found that all his bets had been liquidated, and a profit of 5,783.51 dollars was withdrawn to a debit card that did not belong to him.

Without any explanation, Polymarket deposited 25 dollars into his account. Dane Collins has filed reports with local police, the FBI, and the CFTC. "Polymarket US has had no response for several weeks." After submitting identity verification materials twice, the platform froze his account and did not mention the issue of lost funds.