Polymarket Founder Under FBI Investigation as U.S. 'Donkey-Elephant Rivalry' Spills Into Cryptocurrency
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Polymarket Founder Under FBI Investigation as U.S. 'Donkey-Elephant Rivalry' Spills Into Cryptocurrency
With the incoming Trump administration, a glimmer of hope appears to be emerging for the crypto sector.
Navigating Web3 tides with focused insightsBy Pzai, Foresight News
According to the New York Post, Polymarket CEO Shayne Coplan was investigated by the FBI yesterday and had his phone and other electronic devices seized. He did not disclose the reason for the raid, but sources suspect it may be political retaliation—because Polymarket accurately predicted that Trump would easily defeat Vice President Kamala Harris, contrary to traditional opinion polls.
As Coplan voiced criticism against the current administration, Elon Musk echoed agreement on X (formerly Twitter). In response, Coplan posted an "eagle" emoji, sparking a new speculative frenzy in the market. A related meme token surged in popularity, briefly reaching a market cap of $40 million.
Since Trump's return to power, expectations of regulatory relief in the crypto space have significantly increased. However, during its final months in office, the Biden administration appears determined to tighten crypto regulation one last time wherever still possible.
Polymarket Shines Bright
The report also suggests sources believe the government might use liberal media coverage to accuse Polymarket of manipulating markets and distorting public opinion to support Trump.
To understand what actually happened, we can compare polling predictions with actual results. Just days before voting ended, Galaxy Digital compiled prediction data from election markets. The final result, measured by electoral votes, stood at 58% for Trump versus 42% for Harris. Overall, prediction markets consistently gave Trump a win probability above 55%, far closer to reality than the average poll prediction hovering around 50%. As centralized entities, mainstream pollsters inherently carry ideological biases—and the gap between their forecasts and market-based predictions underscores this fact.
Left: U.S. election market forecast distribution on November 5. Source: Galaxy Digital. Right: Actual results of the 2024 U.S. presidential election.
In this highly efficient prediction market, some traders reaped enormous gains. For example, French trader Théo placed a large bet on Trump winning a second term via the crypto prediction platform Polymarket. According to platform data, he earned $85 million from this single trade. Meanwhile, total trading volume on Polymarket reached $3.5 billion. However, its operations in the U.S. have not been without challenges. In 2022, Polymarket was forced to suspend trading in the United States and pay a $1.4 million penalty to settle allegations with the Commodity Futures Trading Commission (CFTC) over failure to register with the agency.
In any case, Polymarket itself stated: "We’ve proven that prediction markets are smarter than opinion polls, media, and experts."
The Present and Future of the Battle
As a byproduct of political conflict, the Democratic-Republican rivalry has naturally spilled into the crypto sphere. Two clear factions have emerged: one pro-crypto camp led by Elon Musk and Donald Trump; the other represented by the Securities and Exchange Commission (SEC), which advocates strict crypto regulation and communicates its stance through lawsuits and fines. Yet the SEC does not always enjoy public support.
Following the SEC’s cases against ConsenSys and Ripple, an appeals court ruled that the SEC’s rejection of Grayscale’s spot Bitcoin ETF application was “arbitrary and capricious.” After dropping charges against Ripple’s co-founders, the SEC faced intense public scrutiny. In a previous interview with Foresight News, SEC Commissioner Hester M. Peirce, a known advocate for crypto innovation, said: “Good regulation allows innovators to focus on building within clear rules, rather than constantly trying to interpret the rules they’re supposed to follow.” (Read more: Interview with America's 'Crypto Mom' at the SEC: Behind 10 Years and $3 Billion in Penalties Lies Insufficient Regulatory Progress)
Under the Biden administration, Gary Gensler has issued Wells Notices (preliminary warnings before formal charges) to several projects, including the blockchain gaming project Immutable, NFT marketplace OpenSea, and stock/crypto trading platform Robinhood. However, with only a few months remaining in office, Gensler lacks sufficient time to initiate any new litigation or finalize new regulations. Furthermore, the next SEC chair will have the authority to reverse these actions.
Looking ahead to the next four years following the finalization of election results, under Trump’s agenda of elevating Bitcoin and ensuring American leadership in crypto, a president-appointed pro-crypto SEC chair is likely to adopt a hands-off approach. This could lead to legislation clarifying core functions of crypto markets, enhancing regulatory transparency, increasing leniency toward the industry, and enabling sustainable development of ecosystem projects and real-world applications.
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