In summary:
Coinbase may share user data with the CFTC in the Polymarket investigation, raising privacy concerns.
The platform faces scrutiny following prior CFTC penalties and global investigations into compliance and market manipulation.
US customers circumventing laws via VPNs could be at risk as Coinbase complies with regulatory requests.
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The U.S. Commodity Futures Trading Commission (CFTC) has reportedly issued a subpoena to Coinbase, the largest U.S.-based cryptocurrency exchange.
According to reports, the commodities regulator is seeking information related to the crypto-based prediction market platform Polymarket.
See Also: CFTC Chair Rostin Behnam to Step Down the Same Day as Gensler
CFTC Summons Coinbase
Eric Conner, co-founder of EthHub, shared the news in a post on X (Twitter), shedding light on Coinbase’s legal troubles. According to a customer notice, Coinbase has allegedly informed users of the subpoena. The exchange stated that while no immediate action is required from them, the exchange “may be required” to share certain user account data with the CFTC in response
“We are writing to inform you that Coinbase has received a subpoena in the above-referenced matter requesting general customer information including information related to your account,”
the email allegedly from Coinbase to customers
Coinbase’s notice to customers also reportedly clarified that unless it receives “a motion to quash or other legal filing” by Jan. 15, 2025, it will be compelled to provide the requested information. This latest legal move comes amid increased scrutiny of Polymarket, a decentralized prediction market platform that has faced prior legal action.
Notably, Polymarket has been inaccessible to U.S. residents since 2022. This followed a $1.4 million settlement with the CFTC for operating as an unregistered derivatives trading platform. Despite this restriction, reports indicate that some U.S. users still accessed it by using virtual private networks (VPNs).
The CFTC’s subpoena to Coinbase raises concerns about the potential implications for its users. While the exchange said no immediate action is required from users, the possibility of sharing user data with the CFTC could unsettle its customer base. The CFTC has not clarified what specific information it is seeking or how it intends to use the data in its broader investigation.
At the time of writing, Polymarket has not publicly commented on the subpoena. Similarly, Coinbase did not immediately respond to BeInCrypto’s request for comment. However, the situation reflects the increasing intersection between cryptocurrency platforms and regulatory oversight.
Meanwhile, the subpoena comes amid escalating legal challenges for Polymarket. In mid-November, the Federal Bureau of Investigation (FBI) raided the home of Polymarket CEO Shayne Coplan. The agency seized Coplan’s phone and other electronic devices. The raid occurred just days after a presidential candidate won the November 2024 U.S. election.
In retrospect, the election had been a significant driver for Polymarket. As BeInCrypto reported, the platform’s betting volume surpassed $3 billion during the election cycle. Some users reaped up to $50 million in profits from correctly predicting the candidate’s victory.
The surge in Polymarket’s activity also fueled concerns about the potential for manipulation in decentralized prediction markets. Following the U.S. election, global regulators, including France’s National Gaming Authority, reportedly launched investigations into Polymarket’s operations and compliance with local gambling laws.
These concerns add to the regulatory scrutiny Polymarket has faced since its inception, even as the platform’s appeal continues to grow globally.
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