In February, the processor handling debit-card deposits for Polymarket’s new U.S. app delivered alarming news: fraudsters were flooding it. Stolen cards were linked to thousands of fresh accounts, wagers placed, winnings pulled out to clean cards. Thieves tried to take at least $10 million, and at the peak Checkout.com was rejecting more than 80% of deposits as fraudulent, against an industry norm of about 1%. According to people familiar with the events, the Journal reports, CEO Shayne Coplan’s answer to his alarmed compliance staff was to keep growing and pay a fine if regulators ever found out.
That’s the spine of a WSJ investigation by Katherine Long, Caitlin Ostroff and Neil Mehta. Seven users drove most of the attack, one trying about 4,000 deposits; most attempts failed. The consequential decision came afterward: with withdrawals backed up, leadership scrapped the rule that money must leave to the source it arrived from — the basic anti-laundering safeguard DraftKings (DKNG) and Flutter Entertainment’s (FLUT) FanDuel use. Some employees warned of money laundering, the paper says; executives maintained other protocols were enough.
The exits, the review and the round
Andrew Clifford, the U.S. compliance chief, resigned in April after sending executives a long report on the fraud. Polymarket then fired U.S. division CEO Justin Hertzberg, and its heads of U.S. regulation and anti-money-laundering left. The company’s side: a review by law firm Sullivan & Cromwell concluded Polymarket had complied with regulations, and by May fraud rates were back to norms, helped by a cap on linked debit cards and a new anti-fraud contractor, Riskified (RSKD). A spokeswoman says the company is growing responsibly; its first CFO, Warren Jenson, was Amazon’s CFO in the early 2000s.
The money never paused. Polymarket paid $112 million last summer for a licensed exchange that became Polymarket US, opened it in December and had drawn more than $500 million of deposits by August. A $1 billion round closed around April at nearly $15 billion; another $1 billion is being raised at about $21 billion, with an IPO discussed for next year. Against that: a CFTC investigation, a New York City Council probe of prediction-market ads, almost two dozen traders alleging deceptive practices and more than a dozen state suits on whether Polymarket, Kalshi and Coinbase (COIN) are unlicensed gambling operations.
Our read
A disclosure the Journal makes and we’ll repeat: Polymarket has a data partnership with Dow Jones, the paper’s publisher, and this desk quotes Polymarket odds, both as the paper prints them and from its own pulls. We’ll keep citing crowd odds as crowd odds — what bettors expect, never an endorsement of a platform. The planning point: a prediction-market position is speculation carrying three risks the odds don’t show — the platform’s controls, the fraudsters weak controls attract, and whether your money can get back out. The customers quoted in this story weren’t complaining about forecasts. They were complaining about plumbing.
So the first question for any platform isn’t the odds but how money gets out: whether withdrawals must go back to the account it came from, and how fast they arrive. If the answer’s fuzzy, that’s your answer. Keep any such money small, separate and out of the retirement bucket, sized like a night out: a loss you’d shrug at. That’s no knock on prediction markets, only on treating an app that holds your cash as if it were a bank.