“Just keep expanding. If regulators find problems, we can pay the fine.”
That remark, attributed by current and former employees to Polymarket CEO Shayne Coplan in a Wall Street Journal report, captures the operating approach described by people who spoke to the paper: growth first, even as compliance, legal and product issues piled up.
The report was written by Katherine Long, Caitlin Ostroff and Neil Mehta. It says Polymarket, while racing to attract users and investors, ran into repeated compliance lapses, legal disputes and software failures.
February fraud attack exposed weaknesses at Polymarket US
In February, a partner handling debit-card transactions for Polymarket’s US betting platform warned the company that fraudsters were flooding the service.
According to the report, bad actors linked stolen debit cards to Polymarket US accounts, used those accounts to place bets, and then tried to withdraw funds to clean bank cards or accounts they controlled. The attempted theft totaled at least $10 million.
During the incident, the payment firm classified more than 80% of deposit transactions as fraudulent, far above an industry norm of about 1%. People familiar with the matter said employees escalated the risk to Coplan. Compliance staff recalled that his response stunned them: “Just keep expanding. If regulators find problems, we can pay the fine.”
Current and former employees told the Journal that the previously unreported comment reflected Coplan’s broader management style at Polymarket.
People familiar with the matter said the fraud rate did not return to 80% after the February attack, but stayed elevated for months. Several executives left after the incident, and the company opened an internal investigation.
Former officials from the Commodity Futures Trading Commission, the Justice Department and the Internal Revenue Service told the Journal that both the scale of the attempted fraud and Polymarket’s response were unusual in commodities and gambling. Unlike traditional commodities exchanges, Polymarket takes retail customer funds directly, which leaves it more exposed to fraud attempts.
Joe Konizeski, a former CFTC enforcement lawyer, said: “This would not happen in a regulated space. Professionals would be handling customer funds and making sure the source and disposition of funds are compliant.”
A Polymarket spokesperson said the company is committed to maintaining accurate, fair and transparent markets and is cooperating with regulators and law enforcement. “Our market integrity mechanisms include processes to detect, review and address suspicious activity.”
Lawsuits and regulatory pressure are building
The Journal said Polymarket is facing a growing list of legal challenges.
The CFTC has already sued the company. People familiar with the matter said Polymarket told employees to preserve records tied to the fraud attack and other matters. The New York City Council is conducting a broad inquiry into Polymarket and other prediction-market platforms. More than 20 traders have also sued, accusing Polymarket of deceptive business practices.
At the state level, more than a dozen lawsuits center on a core question: whether Polymarket and rivals such as Kalshi operate as unlicensed gambling platforms. The report says those cases could reshape the industry.
Fundraising and executive hiring continued
Even as legal risk mounted, Coplan was pushing ahead with a $1 billion fundraising round that would value the company at about $21 billion, according to the report. 1789 Capital, the investment fund tied to Donald Trump Jr., is expected to participate. The fund had already invested about $200 million in Polymarket.
The report also notes that Polymarket has a data partnership with Dow Jones, the parent company of The Wall Street Journal. At the same time, the company has been trying to recast itself to investors and the public as a more mature business focused on disciplined growth.
People familiar with operations said Polymarket began adding experienced risk-control staff in May, including a former FBI agent, while also tightening compliance processes and improving product testing.
People familiar with the matter said Coplan traveled in late June to the Hamptons home of 1789 Capital co-founder Omeed Malik to discuss how to strengthen internal operations ahead of a potential IPO next year. Malik advised Coplan to bring in more seasoned executives. Polymarket recently hired its first chief financial officer, Warren Jenson, who served as Amazon’s CFO in the early 2000s.
After the Journal published its investigation into Polymarket’s social-media betting business, the company reorganized its marketing team and hired the founder of electric scooter company Bird as head of growth. Other marketing employees involved in social-media campaigns either left or saw their responsibilities reduced.
A company spokesperson said: “Polymarket is growing quickly and improving every day. We’re proud of our newly hired leadership team and our continuously upgraded infrastructure, and of scaling the business at the intersection of finance, technology and culture while staying committed to responsible growth.”
Management style and internal culture drew criticism
The report describes Coplan, 28, as blunt and forceful, saying he had berated employees in the office. Former employees said late-night work was common and that Adderall use was widespread inside the company. Several former staffers said Coplan repeatedly pushed engineers to ship new features and often changed requirements.
An audio recording reviewed by the Journal showed that in July last year, during a discussion over how to resolve a betting dispute, Coplan said: “Dude, this is so stupid. The fact that you guys are complaining about this over and over is ridiculous.”
After settling with federal regulators in 2022, Polymarket was barred from offering its international platform to US users. In 2024, as the company became more prominent, two federal agencies opened investigations into whether it had violated that settlement by allowing US traders onto the platform.
The report also says that around the same time, a prank-loving employee placed a life-size cardboard cutout in the office modeled on imprisoned crypto fraudster Sam Bankman-Fried. Part of the joke, according to the Journal, was that Coplan, another crypto billionaire, looked somewhat like him.
Preparing a return to the US market
After the international platform was barred from serving US users, Coplan told employees to prepare for a return to the domestic market.
The Journal said Polymarket laid the groundwork for a US app while negotiating with regulators to resolve the investigations. Last summer, the company spent $112 million to acquire a licensed exchange and convert it into Polymarket US.
Polymarket US opened to early users in December. People familiar with the matter said traders poured in and total account deposits topped $500 million.
As one anti-money-laundering safeguard, Polymarket US used a standard rule common at financial exchanges: funds deposited through one payment channel had to be withdrawn back to that same channel. Without that rule, fraudsters could load stolen debit cards, trade, and then cash out profits to clean cards.
Federal law does not require prediction markets to follow that rule. Other brokers and betting apps, including DraftKings and FanDuel, do follow it. Kalshi, Polymarket’s main rival, does not use the same-channel withdrawal rule, but people familiar with the matter said Kalshi reviews cross-channel withdrawals and freezes suspicious payments.
Withdrawal backlog led to a key control being removed
In January, trading on the US app was still small compared with Polymarket’s international platform: less than $300 million in bets versus more than $7.6 billion internationally.
Even though the US app was still in beta and available only to a limited group of users, Coplan wanted to remove as much friction from the user experience as possible. One priority was fast withdrawals.
By February, Polymarket’s Discord community was full of complaints about slow withdrawals. Staff told users that funds were being processed, but compliance reviews could delay withdrawals by days or even weeks. Engineering failures on the US app made the problem worse.
In February, payment processor Checkout.com told Polymarket that fraudsters were attacking the platform by linking stolen debit cards to thousands of new accounts. People familiar with the matter said most deposit attempts failed and the attack was concentrated among seven users, one of whom tried to make about 4,000 deposits. Checkout.com still works with Polymarket and declined to comment on the incident or the relationship.
The attack overwhelmed the compliance team and worsened the withdrawal backlog. People familiar with the matter said management decided to remove the same-channel withdrawal rule to speed up customer payouts, even though some employees warned that doing so would create an opening for money laundering. Executives believed other safeguards were enough.
Former federal prosecutors told the Journal that failing to control money laundering adequately could raise issues under federal anti-money-laundering laws, illegal funds transfer laws and even bank fraud statutes. The CFTC and the Justice Department have brought such cases against multiple companies, including crypto exchanges, with some penalties reaching hundreds of millions of dollars. The report says the anti-money-laundering requirements that apply to Polymarket are comparatively lighter.
People familiar with the matter said Andrew Clifford, chief compliance officer of Polymarket US, resigned in April after submitting a lengthy report detailing the fraud problems. Clifford and Polymarket both declined to comment on his departure.
Around the same time, Polymarket completed a $1 billion fundraising round at a valuation close to $15 billion, with Donald Trump Jr.’s fund among the investors.
Soon after, Polymarket fired US division CEO Justin Hertzberg. The head of US regulatory affairs and the anti-money-laundering lead also left. Hertzberg did not respond to requests for comment. People familiar with the matter said an investigation by Sullivan & Cromwell concluded that the company’s operations complied with regulations.
By May, one person familiar with the matter said, the fraud rate had returned to normal industry levels after Polymarket limited the number of debit cards that could be linked to a single account and brought in anti-fraud provider Riskified.
Product rollouts and customer complaints kept surfacing
The Journal said Polymarket has also been trying to fix problems caused by rushing out new features. Former employees said the company often pushed updates to users before they had been fully tested. When engineers objected and argued that existing bugs should be fixed first, Coplan at times told them to use AI to build new features anyway.
One man in New York said $950 disappeared from his account after the app crashed in July. A woman in California said $1,500 remained stuck in her account and could not be withdrawn. A 22-year-old user in Massachusetts said his account was locked, he contacted customer support dozens of times, and still heard nothing back for weeks.
People familiar with the matter said Polymarket has compensated some affected customers. Others recovered unauthorized charges through their banks. The company has also improved code-review procedures and hired more engineers, according to the report.
New market ideas raised manipulation concerns
Coplan has also pushed the team to launch a stream of provocative new prediction markets. Text messages reviewed by the Journal showed that he proposed markets such as “How many times will Kanye mention Jews on X this week” and “Who will Elon insult again.” Those markets were never launched.
In June, the company filed a trademark application for “create your own market.” Former employees said the idea has long been part of Coplan’s growth strategy: let users launch prediction markets on a wide range of topics.
Rajiv Sethi, a Barnard College economics professor who studies prediction markets, said allowing users to create their own markets would introduce new manipulation risks.
Celebrity deals and advertising controversy
Coplan wants to turn Polymarket into a mainstream consumer brand, and the company has spent heavily on deals with celebrities and sports stars, including NBA player LeBron James. It also signed a $300 million partnership with Major League Baseball.
People familiar with the matter said LeBron James’ team told a rival prediction-market company that Polymarket had offered $20 million a year plus $50 million in equity. The Journal said it could not verify the final terms of the deal, though people familiar with the matter said LeBron James does not currently hold Polymarket equity.
Last fall, Polymarket also discussed a partnership worth tens of millions of dollars with musician Drake. A Polymarket spokesperson and Drake’s team said no deal was signed. Drake later mentioned Polymarket and Coplan on the album Iceman, and Coplan attended a private album release event at Drake’s castle-like mansion in Toronto.
In late April, Polymarket listed a market on whether Drake would say “Polymarket” on the new album. An account created shortly before the release, and used only to bet on album-related markets, ultimately collected $7,800 in profit. People familiar with the matter and records reviewed by the Journal said Drake’s team played the album for Polymarket employees hours before release. After staff heard the company’s name in the album, they pulled the market over insider-trading concerns.
One person involved in partnership talks said the return on brand deals was hard to measure, but Coplan did not seem concerned about whether the deals would pay off and was focused on getting them done. When employees questioned whether the price was too high, he replied: “I don’t care at all.”
Executives at Intercontinental Exchange, or ICE, Polymarket’s largest investor, told the Journal they were worried the company had made several strategic mistakes. A June Journal report said Polymarket paid influencers to post fake trading videos and advertised its offshore platform to US users. According to the report, that alarmed ICE and other investors, who worried the conduct could violate federal advertising law and Polymarket’s settlement with the CFTC barring offshore services for US traders.
At the end of July, ICE disclosed in its quarterly filing that it held $1.6 billion worth of Polymarket shares, equal to 22% of the company’s outstanding stock.
A second attack hit nearly 500 users in July
The Journal said that in late July, nearly 500 Polymarket users were affected by another fraud attack tied to an engineering flaw.
People familiar with the matter said attackers could use someone else’s personal information, such as a stolen Social Security number, to open a new account and then take over that trader’s existing Polymarket account and linked bank cards without needing a password or username. The total amount stolen in the incident was not large.
A female Polymarket spokesperson said the company would reimburse users for all lost funds.
Several users told the Journal and posted in Discord that they lost thousands of dollars and sent repeated messages to customer support without getting a response for weeks. A Polymarket employee said in Discord in July that the engineering team was working on fixes for affected users.
Dane Collins, 26, said he started using Polymarket US in May to bet on the World Cup. Kalshi had been barred by court order from offering sports betting where he lives in Michigan. When he logged in during July, he found that all of his bets had been closed and that $5,783.51 in winnings had been withdrawn to a debit card that was not his.
Polymarket then credited his account with $25 without explanation. Collins said he filed reports with local police, the FBI and the CFTC. “Polymarket US has not responded for weeks,” he said. After he submitted identity-verification materials twice, the platform froze his account and did not address the missing funds.
