Polymarket is drawing scrutiny over how it handled a fraud scheme on its US platform, according to a Wall Street Journal report published September 20. The report, based on interviews with current and former employees and investors, describes a pattern of compliance failures and legal challenges the company has faced while pursuing rapid growth.
In February 2026, fraudsters attached stolen debit cards to thousands of new Polymarket accounts, placed bets, and attempted to withdraw the proceeds to accounts under their control, the Journal reported. Checkout.com, the payment processor handling Polymarket’s US debit-card transactions, flagged the activity and began rejecting deposits at an unusual rate. At its peak, more than 80% of incoming deposits were rejected as fraudulent, compared with an industry norm of roughly 1%. The attempted fraud totaled at least $10 million, though the figure reflects what attackers tried to withdraw rather than confirmed losses.
According to people familiar with the events, seven users were responsible for most of the suspicious activity, with one account making close to 4,000 deposits.
When Polymarket’s compliance team raised the issue with CEO Shayne Coplan, sources told the Journal his response was to keep growing the business and deal with any fine later if regulators intervened. Current and former employees described this as consistent with a broader company culture oriented around growth. Polymarket also loosened a prior safeguard requiring withdrawals to go back to the same payment source used for deposits, a common anti-money-laundering control; some employees warned this could increase money laundering risk, while executives said other internal controls were adequate.
Former CFTC enforcement lawyer Joe Konizeski told the Journal the scale of the issue was unusual for a regulated platform. “In the regulated space, this kind of thing does not happen,” he said.
A Polymarket spokesperson said the company remains committed to maintaining compliance standards, according to the report.
The Commodity Futures Trading Commission is investigating Polymarket, and employees have reportedly been told to preserve records related to the fraud incident and other matters. The company has also faced separate legal challenges: nearly two dozen traders have filed lawsuits alleging deceptive practices, and more than a dozen state cases are examining whether prediction markets operated by Polymarket and competitors such as Kalshi and Coinbase amount to unlicensed gambling. New York City officials are separately reviewing advertising practices across the sector.
The fraud disclosure comes as Polymarket pursues a new funding round at a reported valuation of about $21 billion. The company entered the regulated US market after acquiring a licensed exchange for $112 million, and its American platform drew more than $500 million in deposits after opening to early users in December.
Polymarket previously paid a $1.4 million fine in a separate CFTC matter.
