From: allin
On Wednesday, November 13th, eight days after the election, the FBI raided the home of Polymarket CEO Shane Copelan at 6:00 AM, seizing his phone [00:58:17]. This action came after Polymarket, a platform for political prediction markets, had accurately called the 2024 presidential election [00:59:22].
Background and Allegations
Bloomberg reported that Polymarket is under investigation for allegedly accepting trades from US-based users [00:58:28]. This is not the first regulatory issue for the company:
- In 2022, Polymarket paid $1.4 million to settle a case with the CFTC (Commodity Futures Trading Commission) for offering option contracts without proper designation [00:58:37].
- The CFTC also ordered Polymarket to prevent US traders from making bets [00:58:48].
- Polymarket had previously stated they took additional steps to block Americans from trading [00:59:54].
In contrast, other platforms like Kalshi and Robinhood were able to offer presidential prediction markets because Kalshi successfully won its lawsuit against the CFTC the month prior [00:59:57]. Polymarket, however, remains banned from the US due to its 2022 settlement [01:00:10].
It was noted that Americans are generally not allowed to participate in many different markets, with similar actions having been taken against poker, crypto, and real estate entities [01:00:03].
Reactions and Speculation
Polymarket claimed the raid was “political retribution by the outgoing Administration” [00:59:16]. Shane Copelan posted on X (formerly Twitter), stating it was “discouraging that the current Administration would seek a last-ditch effort to go after companies they deem to be associated with political opponents” [00:59:27].
Despite the controversy, Polymarket was described as being “much more accurate” than traditional polls, correctly predicting the election outcome [00:59:46]. Peter Thiel and Founder’s Fund have invested in Polymarket, and Nate Silver serves as an advisor [00:59:39].
It was observed that the FBI’s action occurred after the election was resolved, suggesting they likely knew doing it beforehand would be perceived as political [01:00:41].
Theories on the FBI’s Actions
Three main theories were discussed regarding the FBI’s raid, though it was emphasized that these are speculative and unproven:
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Theory 1: Illegal Domestic Wagering by “Whales” The first theory suggests the feds were investigating whether any domestic “whales” (large-scale investors) were illegally wagering on the election outcome, as the money was theoretically supposed to be offshore [01:02:02]. However, this theory loses credibility because a court ruling just days before the election legalized domestic wagering [01:02:16].
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Theory 2: Wash Trading / Market Manipulation Fortune Magazine raised the theory that Polymarket was “rife with what’s called wash trading” [01:02:37]. Wash trading is a form of market manipulation where shares are bought and sold simultaneously or repeatedly by the same individuals to create a false impression of volume and activity [01:02:42]. This practice is illegal in the US and occurs in crypto markets [01:02:56]. Doubts were raised, however, about the extreme nature of a home raid for such an allegation, suggesting a subpoena during business hours would be more appropriate [01:03:01].
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Theory 3: Political Manipulation of Markets A more controversial theory posits that if manipulation occurred, it might have been on behalf of the Kamala Harris campaign [01:03:39]. In the final days of the election, Polymarket (and especially Kalshi) showed a “weird blip” where the odds suddenly flipped to Kamala Harris, particularly in Pennsylvania [01:03:49]. This turned out to be inaccurate, as Trump won Pennsylvania “pretty handily” [01:04:10]. This blip in the prediction markets coincided with a “media push” from Harris supporters to create a narrative of a “late break for Harris” by independents [01:04:31]. The theory suggests someone might have been trying to push the prediction markets at the last minute to fuel this media narrative [01:04:44].
Despite the various theories, the CEO’s confident reaction (tweeting “new phone who dis”) was seen by some as an indication that the situation might not be as serious as the raid implies [01:01:46]. It was also suggested that the legal complexities surrounding prediction markets and their evolving regulatory status might contribute to such actions [01:05:33].