The FBI seized the phone and electronics of Polymarket CEO Shayne Coplan, reported the NY Post. On Wednesday morning New York time, agents visited Coplan to demand access to all electronic devices.
Polymarket’s CEO Shayne Coplan had his phone and electronics confiscated by the FBI. According to a source cited by the NY Post, the FBI organized a raid rather than contact Coplan’s lawyer.
The raid against Coplan and Polymarket recalls this year’s arrest of Pavel Durov in France, where authorities put pressure on the platform for unauthorized encryption.
According to the source, the authorities would try to accuse Polymarket of manipulating public opinion and affecting the election results. Coplan himself was not arrested, and according to some sources was not even physically present. The CEO of Polymarket was also not provided with a reason for the raid and confiscation.
Coplan has not posted anything new on X since November 7 and has not mentioned the raid. Polymarket continues to function, with leading bets focusing on sports, post-election politics, and the price of Bitcoin (BTC).
Polymarket resides in a New York office on 1280 Lexington Avenue. Polymarket excludes US traders to comply with NY crypto regulations and most of its bets come from overseas markets. The company was fined $1.4M by the Commodities Futures Trading Commission in 2022 for failing to register as a Swap Execution Facility.
The raid happened at a time when Polymarket aims to retain its user base by promising an airdrop.
Polymarket prediction sparks speculation of election interference
The raid came just days after Polymarket gained mainstream attention after essentially predicting the US election results earlier than all other media outlets. The effect of Polymarket hinged on its most active betting pair, the winner of the US presidential election, which for weeks pointed to a decisive Trump victory.
The leading betting pair also resolved hours before the official call of the election winner, leading to speculations about the source of foreknowledge. Shayne and other platform users claimed that Polymarket simply reflected the convictions of the betting whales, who put their wealth on the line.
The certainty of knowing about Trump’s victory earlier once again raised the spectre of speculation about election interference. Even Elon Musk was a high-profile promoter of Polymarket, as he did not wait an additional four hours for mainstream media to call the election winner.
“This is obvious political retribution by the outgoing administration against Polymarket for providing a market that correctly called the 2024 presidential election,” said the unnamed source for the NY Post.
Polymarket’s betting profiles also had a better approximation than polls, which predicted a Harris victory. Since October, Polymarket was also suspected of hosting deliberate bets from foreign actors, with the goal of swaying public opinion of the election odds. However, whales turned out to be independent, betting more than $70M in total on Trump’s victory.
Not all betting pairs on the platform have the same reliability, due to low volumes and the potential for manipulation. However, swaying the market for a US election winner was much harder, due to the high volumes and big whale positions.
All activity on Polymarket is fully transparent on-chain, including all USDC spending to buy the token for one of the binary choices. Just days before the elections, the Polymarket odds were seen as the result of interference by foreign nationals.
However, Polymarket is a self-balancing platform. Even if someone bet on Trump’s victory, it would make the Harris side of the bet even cheaper. The reason for Trump’s prevalence is that the opposite position simply did not see the matching buying demand. If the betting market was unrealistic, but manipulated, bets on Harris would have been immensely lucrative.
Instead, it turned out that at least four of the most active wallets with bets on Trump belonged to an unnamed Frenchman, known as user Fredi9999. After realizing more than $47M in gains from making the right call, Fredi9999 cashed out of all positions. Since then, Polymarket only retained 50% of its volume and open interest.
After the elections, Polymarket only carries $174M in liquidity, compared to more than $527M during the peak betting period. Polymarket hosts more than 21K users, with $34M in daily volumes.
