Polymarket Bolsters Fraud Controls Ahead of US Midterms

Polymarket, the blockchain-based prediction market platform, says it is fully prepared to police trading activity as the United States midterm elections approach. The company's new global head of investigations and intelligence, Shana Bautista, stated that systems are in place to identify anomalous activity during the election period.

Bautista, a former FBI investigator and Coinbase analyst who joined Polymarket in June, said the company is also working to keep US users off its international platform, as required by a 2022 settlement with the Commodity Futures Trading Commission (CFTC). She expressed confidence that the platform's guardrails can block the vast majority of US-based users.

The company faces pressure from US lawmakers who worry that prediction markets could enable insider trading and undermine public confidence in election integrity. Critics point to the anonymity of traders on the blockchain, though Polymarket argues the public ledger provides valuable data for monitoring suspicious activity.

To address these concerns, Polymarket is launching a new web page detailing its market integrity program. The page will explain how the company uses machine learning, blockchain analytics, trade surveillance, and open-source research to detect and prevent malicious behavior. The company says it has already referred more than a hundred cases to law enforcement, including a US soldier accused of betting on the capture of Venezuela's Nicolas Maduro using classified information.

Polymarket re-entered the US market last year by acquiring a registered exchange. The company's CEO has previously stated that federal regulators dropped a probe into whether it breached its settlement with the CFTC.