Trouble from the top
US Rep. Dina Titus has added Congressional weight to a recent insider trading scandal involving Polymarket. A bettor suspiciously made $400,000 via the prediction market platform over the ousting of Nicolás Maduro as President of Venezuela.
The Congresswoman sent Polymarket CEO Shayne Coplan a letter on Friday demanding he share what insider trading safeguards his NY-based firm has in place.
serious concerns”
Titus took to X the share her demand, highlighting her “serious concerns about Polymarket’s ability, and willingness, to comply with CFTC regulations:”
The Congresswoman, whose district includes the Las Vegas Strip, gave Coplan a three-week deadline to respond to her demands. Top of Titus’ concerns is Coplan’s firm’s “apparent failure to meaningfully address trading based on material nonpublic information (MNPI).”
Maduro and more
The mystery trader who made more than $400,000 on Venezuelan President Nicolás Maduro’s downfall after placing pinpoint bets just hours before the military operation, raised widespread suspicion of insider trading.
The suspect cashed out while the Maduro market was still active on Polymarket, but Coplan’s firm has drawn the ire of thousands of bettors after stating last week it didn’t recognize the capture of Venezuelan Maduro as an invasion and, as such, wouldn’t be paying out.
Enter Titus, who has demanded Polymarket provide evidence of its insider trading rules or policies and answer questions about compliance. Titus wants to know how many accounts the firm has “suspended, restricted, or terminated” for insider trading.
The Congresswoman stated the timing of the concerns raised by the Maduro scandal “highlights the need for robust surveillance, compliance, and enforcement mechanisms.”
hundreds of contracts that are susceptible to manipulation
Titus said while insider information related to the US strike in Venezuela presented a “blatant” threat to national security, Polymarket “lists hundreds of contracts that are susceptible to manipulation and insider trading.”
She cited examples of other red flags, including the Polymarket bettor who correctly hit 22 of 23 Google Bets to net over a million dollars in under 24 hours, and “mention markets.”
For the latter, Titus referenced how easy it was for Coinbase CEO Brian Armstrong to manipulate markets by using the words “Bitcoin, ethereum, blockchain, staking and Web3” during a live earnings call.
Titus not cool with it
The US Rep., who has been against prediction markets from the get-go, stated in her letter to Coplan that Polymarket’s execs “publicly downplayed, or even endorsed” the use of nonpublic information .
Titus referenced a November comment by Coplan that encouraged the use of MNPI, stating it was “cool” that Polymarket offered a financial reward “for people to go and divulge the information to the market and the market to change, and all of a sudden it’s trading at 95 cents.”
The Congresswoman, who sits resolutely on the side of state gambling regulators fighting to stay relevant amid the sweeping changes brought by prediction markets, said the CEO’s comments appear “fundamentally at odds with the spirit and letter” of the Commodity Futures Trading Commission’s regulations and provisions.
Titus had earlier written that since making its return to the US, Polymarket was subject to regulation from the federal body, but questioned if the prediction market giant “has adopted and is enforcing adequate safeguards consistent with CFTC rules.”
