Polymarket's Derivatives Exchange Acquisition Sets Stage for a Return to US

Michael Nagle / Bloomberg via Getty Images

Online prediction market Polymarket has been barred from operating in the U.S. since 2022 Polymarket is returning to the U.S.

The company on Monday acquired derivatives exchange and clearinghouse QCX for $112 million, paving the way for it to return to this market. The acquisition comes weeks after the Commodity Futures Trading Commission granted QCX a license to operate as a contract market.

"With the acquisition of QCEX, we are laying the foundation to bring Polymarket home — re-entering the US as a fully regulated and compliant platform that will allow Americans to trade their opinions," Polymarket CEO Shayne Coplan said in a press release.

Polymarket operates a peer-to-peer prediction market, in which users bet on the outcome of events spanning politics, culture, and sports, with wagers denominated in cryptocurrency. The company, while based in New York City, has been barred from taking bets from U.S. residents since 2022, when the CFTC accused it of operating a derivatives trading platform without proper registration.

Polymarket's users accurately predicted Donald Trump’s victory over former Vice President Kamala Harris in last year's presidential race, even as many pollsters saw the contest as effectively a coin toss. Polymarket users bet nearly $3.7 billion on the outcome of the presidential election last year.

Federal Probe Into Polymarket Dropped This Month

In the days after the election, Coplan said Polymarket returning to the U.S was "part of the plan." Shortly thereafter, Coplan's apartment was raided and his phone seized by FBI agents as part of a federal investigation into whether Polymarket had continued to accept U.S.-based bets in violation of its agreement with regulators. That investigation by the CFTC and Justice Department was dropped earlier this month, according to a Bloomberg report.

The investigation into Polymarket was the latest in a string of Biden-era cryptocurrency cases to be closed by the Trump administration. Federal regulators earlier this year dropped cases against crypto exchanges Coinbase Global (COIN), Kraken, and Binance, as well as online brokerage Robinhood (HOOD).

Polymarket is in talks to dive deeper into cryptocurrencies. The platform currently settles trades with Circle Internet Group's (CRCL) USDC, and Coplan on Wednesday told CNBC's "Squawk Box"' that it was "exploring" a stablecoin.

Read the original article on Investopedia

View Comments