A Wall Street Journal investigation found Polymarket relaxed an anti-money-laundering control while fraudsters attempted to move about $10 million through its U.S. platform using stolen debit cards and then withdraw betting proceeds. Checkout.com reportedly flagged extraordinary fraud levels, rejecting over 80% of deposits. As fraudulent deposits surged and legitimate withdrawals backlogged, Polymarket leadership removed a safeguard tying withdrawals to the original funding source, despite internal staff concerns about money laundering. Polymarket’s compliance chiefs departed, though an internal Sullivan & Cromwell review reportedly found regulatory compliance. Fraud levels later normalized after card-linking caps, yet the CFTC opened an investigation, and a separate registration flaw exposed roughly 500 user accounts.
This update represents a notable development in the Crypto sector. Organizations and founders tracking this space should evaluate potential strategic and technical implications on their operations.