CFTC Fines Binary Options Platform Polymarket $1.4 Million

The US Commodity Futures Trading Commission (CFTC) has taken action against Delaware-registered Blockratize, which is operating as Polymarket, for illegally offering event-based binary options contracts in the country. Polymarket was charged for operating without obtaining a designated contract market (DCM) or registration as a swap execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term facility (SEF).

The regulator has entered an order filing and simultaneously settled with the company on Monday, making it pay a civil monetary penalty of $1.4 million. In addition, it agreed to wind down all the markets that do not comply with US regulations.

Lucrative Event Market

The official announcement detailed that the platform started to offer binary contracts around June 2020. It offered event-market contracts, allowing traders to bet on any particular events like the outcome of the US presidential elections or the price target of a cryptocurrency by a specified date.

The platform offered more than 900 even-based contracts since its inception, which were hosted as smart contracts on a blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term.

“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” Vincent McGonagle, who is the Acting Director of Enforcement at the CFTC, said in a statement.

“Market participants should proactively engage with the CFTC to ensure that our markets remain robust, transparent and afford customers the protection provided under the CEA and our regulations.”

Though binary options have been termed illegal in most of the jurisdictions due to the fraudulent activities conducted by the operators, the US is one of the very few countries that still allow the operation of the licensed binary options market. However, very few such players are operating in the country.

Interestingly, the major crypto derivatives exchange, FTX made its name offering such event-based contracts, but it did not offer its services in the United States due to the strict regulations.