Polymarket is believed to have hired CTFC enforcement head James McDonald to handle the probe.

New York-based decentralized prediction market Polymarket has come under investigations from the United States Commodity Futures Trading Commission (CFTC).

According to an Oct. 23 report from Bloomberg citing anonymous sources, the CFTC is investigating whether Polymarket is allowing its customers to trade binary options and swaps that should be registered with the financial regulator. The CFTC is yet to confirm whether it is investigating Polymarket.

A spokesperson for the platform stated: “Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry.”

The report claims that the company has engaged the former director of the CFTC’s enforcement division and current partner at legal firm Sullivan & Cromwell, James McDonald, to address the probe.

Polymarket hosts a variety of novelty predictive markets that allow users to speculate on the outcome of future events using the USD Coin stable token. Polymarket does not take positions against its customers and hosts the smart contract interface allowing users to interact with the protocol.

The report asserts the investigation comes as Polymarket is in talks to secure a new round of funding, with anonymous sources claiming the raise could see the firm valued at close to $1 billion.

In October 2020, Polymarket secured a $4 million funding round led by Polychain Capital that also saw participation from CoinShares CSO Meltem Demirors, former Coinbase CTO Balaji Srinivasan, and AngelList CEO Naval Ravikant.

Polymarket is not alone in offering decentralized prediction markets, with Augur launching a Polygon deployment of its platform at the start of October.

While Polymarket offers an eclectic range of markets including speculation on covid case numbers, CryptoPunks floor prices and Donald Trump’s presidential prospects, Augur markets are currently focussed on sporting events and crypto price forecasting.

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