Coinbase Inc. (COIN) has warned customers that a US regulator is seeking information about dealings with prediction market firm Polymarket, according to a person familiar with the situation, and Coinbase has sent messages to customers that says the exchange may need to share that data.
Copies of emails shared with several customers spread on social-media sitesand those warnings about demands by the US Commodity Futures Trading Commission (CFTC) were accurate, the person said. The US derivatives regulator has waged a slow legal battle with prediction market firms, and this latest move comes just days before the agency’s leadership switches from Democratic to Republican when President-elect takes office. elect Donald Trump.
“When we receive requests for information from a government, each request is carefully reviewed by a team of trained experts using established procedures to determine its legal sufficiency,” said a spokesperson for Coinbase in an emailed statement, although the company declined to confirm receipt of the specific subpoena. “If necessary, we will try to narrow down requests that are too broad or vague to provide a more appropriately tailored response, and in some cases we object to producing any information.”
The CFTC lost an initial case against prediction market firm Kalshi when a US federal judge ruled late last year that the agency could not prevent the company from listing election contracts. However, the regulator quickly filed an appeal to a higher court, and Polymarket fought that new legal battle only Congress can stop election betting.
Neither the CFTC nor Polymarket immediately responded to a request for comment on the effort to gather customer information.
On Jan. 20, Trump will take back the White House, and he will be able to appoint a new chairman to replace Rostin Behnam, who led the CFTC during its long legal wrangle over the prediction businesses. Incumbent Republican commissioners Caroline Pham and Summer Mersinger have drawn attention as potential candidates for the open presidency, as has former Commissioner Brian Quintenz.
