Tennessee Regulator Sends Cease-And-Desist Letters To Polymarket, Kalshi, Crypto.com — Details

bitcoinistPublished on 2026-01-11Last updated on 2026-01-11

Abstract

The Tennessee Sports Wagering Council (SWC) has issued cease-and-desist letters to prediction market platforms Polymarket, Kalshi, and Crypto.com, accusing them of offering illegal sports betting contracts to state residents without the required licenses. The regulator ordered the firms to void all pending contracts from Tennessee customers and refund their deposits by January 31, 2026. It cited significant consumer protection risks and threatened fines of up to $25,000 per violation, as well as injunctive relief for non-compliance. This action highlights increasing state-level regulatory scrutiny of prediction markets, even though these platforms are registered with the CFTC and permitted to operate nationally. Similar orders were previously issued in Connecticut.

Tennessee’s sports betting regulator has ordered Polymarket, Kalshi, and Crypto.com to cease offering sports betting contracts, bringing focus to the regulatory landscape of event contract exchanges. The agency accused the three major prediction market platforms of violating state gambling laws by operating in Tennessee without the required licenses.

Polymarket, Others Threatened With Fines For Offering Sports Event Contracts

On Friday, January 9, the Tennessee Sports Wagering Council (SWC) issued cease-and-desist letters to Polymarket, Kalshi, and Crypto.com’s Derivatives Exchange. In the letters, the state regulator asked all three prediction market firms to stop offering sports event contracts to the residents of Tennessee.

The state’s SWC also demanded that the three firms void all pending contracts entered into by Tennessee residents, and refund all customer deposits by January 31, 2026.

SWC Executive Director, Mary Beth Thomas, wrote in the letter to Polymarket:

The sports events contracts offered on Polymarket’s exchange are not compliant with these [Tennessee state consumer] protections (and many others) and are an immediate and significant threat to the public interest of Tennessee.

The language in the Tennessee Sports Wagering Council letters to Kalshi and Crypto.com was quite similar to Polymarket’s cease-and-desist letter. This comes despite all three platforms being registered as designated contract markets with the Commodity Futures Trading Commission (CFTC), allowing them to offer event-based derivatives contracts nationwide.

Source: @WALLACHLEGAL on X

Despite this CFTC designation, these prediction market firms have had regulatory run-ins with different states in the US. In December 2025, the state of Connecticut sent a trio of cease-and-desist orders to Robinhood, Kalshi, and Crypto.com. The firms based their defense at the time on receiving the CFTC’s approval to operate in the United States.

This Tennessee cease-and-desist order seems to be the first state-level regulatory issue faced by Polymarket, which currently only offers sports event contracts in the United States. In the letters, the Tennessee Sports Wagering Council threatened a range of penalties for any of the firms’ failure to comply.

One of the letters further read:

Failure to comply with the SWC’s demand will result in the imposition of fines pursuant to the Act, which states that the SWC shall impose a fine against any person offering wagers in Tennessee without a license in the amount of $10,000 for the first offense; $15,000 for a second offense; and $25,000 for a third or subsequent offense. ‘ Moreover, failure to comply with the SWC’s demand will result in the SWC seeking injunctive relief.

Prediction Markets Facing Increased Regulatory Scrutiny

The prediction markets, which gained prominence during the 2024 US elections, have continued to enjoy interest from users and institutional investors. However, the regulatory scrutiny faced by the industry has seen a similar surge lately.

For instance, a Polymarket trader reportedly netted record gains of over $400,000 from predicting the recent US military action in Venezuela, prompting talks of introducing a bill to prevent insider trading. As Bitcoinist reported, Rep. Ritchie Torres (D-N.Y.) plans to introduce a bill that would ban all government-affiliated individuals from participating in state-related events in the prediction market.

The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView

AGI is Just One Step Away

The article discusses Anthropic's release of the Fable 5 model, a heavily restricted version of its powerful Mythos model. Initially unveiled in April, Mythos reportedly identified over 10,000 high-risk vulnerabilities for 50 enterprise clients, causing significant concern. Due to its dangerous capabilities in areas like autonomous cyber-attacks and biochemical weapons design guidance (classified as CB-1 level), the unaltered Mythos 5 remains limited to about 200 vetted entities like government agencies. Fable 5, released with a safety classifier, demonstrates extraordinary performance, leading benchmarks in coding (SWE-Bench Pro), software engineering, and research. It exhibits true "long-horizon agency," autonomously planning and executing complex, multi-step tasks like migrating 50 million lines of code in a day, moving beyond simple question-answering. The article positions Fable 5 at OpenAI's Level 3 ("Agent") and progressing toward Level 4 ("Innovator"), suggesting AGI (Artificial General Intelligence) is within reach, potentially 18-24 months away. To mitigate risks, Anthropic implemented a two-layer safety "cage": a silent routing system that redirects dangerous queries to a weaker model, and a mandatory 30-day data retention policy for all Mythos traffic to detect patterns of malicious use. Despite its high cost ($10/$50 per million input/output tokens), the model targets the enterprise market, where its unparalleled productivity and defensive capabilities against AI-powered cyber threats justify the premium. This signals a market maturation where top-tier AI becomes a strategic, high-value tool for businesses, potentially widening the gap with consumer-focused models and accelerating the rise of "one-person companies" while disrupting labor markets.

marsbit2m ago

marsbit2m ago

Restoring Crypto Privacy: ZCASH (ZEC) Makes A Move After 50% Crash

Following a severe price crash of over 50% triggered by the discovery of a critical counterfeiting vulnerability in its Orchard privacy pool, Zcash (ZEC) is taking steps to restore confidence. The bug, found by a security researcher using AI, could have allowed undetected creation of fake ZEC tokens. Developers from the Zcash Open Development Lab (ZODL) and others quickly patched the flaw, helping the price rebound over 70%. However, Orchard's privacy features make it impossible to verify if any counterfeit tokens were actually created before the fix. To address this, key ecosystem groups including Shielded Labs and The Zcash Foundation have proposed a new system called Ironwood. Its primary goal is to restore users' ability to independently verify Zcash's total circulating supply. Once activated, node operators could confirm the supply hasn't been tampered with. The Ironwood proposal would also block any new coin minting in the Orchard pool and restrict fund movement through a controlled mechanism. This system could provide evidence on whether the vulnerability was ever exploited. If no excess ZEC attempts to leave the pool, it suggests no counterfeiting occurred. Any attempted exit of fake coins would be blocked and destroyed, publicly revealing any attack while protecting the legitimate supply.

bitcoinist11m ago

Restoring Crypto Privacy: ZCASH (ZEC) Makes A Move After 50% Crash

bitcoinist11m ago

Solana Real-World Assets Gain Momentum With Significant Spike In Transfer Activity

Solana's price has declined recently, breaking key support levels. However, the network's activity, especially in the Real-World Assets (RWA) sector, shows strong momentum. The ecosystem recorded its largest daily transfer volume ever, surpassing $1.49 billion—a more than 2x increase, led significantly by preSPAX. This signals growing adoption of tokenized assets on Solana. Analyst Zensei highlights Solana as the leading platform for spot trading, noting the SOL/USDC pair's 24-hour volume of over $4.9 billion far exceeds other major markets. Another analyst, Crypto Patel, points out that SOL is trading within a key Fibonacci Retracement Zone, similar to a past pattern that preceded a major rally. While an "Altcoin Season" is seen as necessary for a potential push toward $1,000, the current accumulation zone is between $40 and $60.

bitcoinist1h ago

Solana Real-World Assets Gain Momentum With Significant Spike In Transfer Activity

bitcoinist1h ago

AI Investors' 2026 Anxiety: When Models Devour Everything, What Moat Is Left for Startups?

In 2026, a wave of investor anxiety questions the defensibility of AI startups as models improve, fearing that most companies are just "thin wrappers" destined to be absorbed by foundation models or chipmakers. The author argues against this despair, positing that true moats lie not in benchmark performance but in areas models cannot easily reach. The logic of despair is that if models excel at all measurable tasks, only compute and cutting-edge model weights hold lasting value. However, the essay contends that the most valuable work is inherently "untrainable." Benchmarks measure what can be measured and thus optimized for, but real-world correctness often resides in private, complex systems. Examples include legacy codebases, intricate legal transactions, or hospital workflows. This kind of correctness is proprietary, costly to establish, and cannot be validated quickly—it requires time and trust within an organization. As models commodify visible, measurable tasks from both above (labs absorbing scaffolding) and below (saturation by cheaper models), value shifts to "untrainable ground." This encompasses work where correctness is a private truth, locked behind integration barriers, licenses, liability frameworks, and entrenched user habits. Trust and adoption are slow, human-centric processes that smarter models cannot accelerate. Successful companies defend their position by embedding deeply into client operations, owning the definition of "good" within a specific domain (e.g., Harvey in law, OpenEvidence in medicine), and pricing on outcomes rather than tokens. While labs compete fiercely, they are incentivized to keep the application layer vibrant. The future belongs not to those competing on generic benchmarks but to those navigating unscoreable terrain, doing the "unsexy work" of translation between models and messy human realities. The most cited benchmark scores are thus maps of territory about to become worthless, signaling who will lose the right to define what counts as good.

marsbit1h ago

AI Investors' 2026 Anxiety: When Models Devour Everything, What Moat Is Left for Startups?

marsbit1h ago

Three-Year High Smashes Rate-Cut Hopes, Who's Using CPI to Clean Out Whale Holdings?

U.S. CPI inflation accelerated to 4.2% year-over-year in May, reaching a three-year high and dampening market expectations for Federal Reserve rate cuts in 2026. The surge was primarily driven by a sharp 23.5% annual increase in energy prices, fueled by geopolitical conflicts. While core CPI rose 2.9% year-over-year, showing relative moderation, the hotter-than-expected headline data prompted a repricing in interest rate markets. Traders now overwhelmingly expect the Fed to hold rates steady, with some even pricing in potential rate hikes for late 2026 or 2027. The report triggered declines in major U.S. stock indices and pressured risk assets like Bitcoin, which remained volatile around $61,000-$62,000. Analysts note that while the energy-driven inflation spike is concerning, the controlled core figures provide the Fed room for patience. However, the "higher for longer" interest rate narrative has solidified. For crypto markets, this translates to continued outflows from Bitcoin ETFs, heightened volatility, and a market seemingly in a "capitulation" phase, with leverage reset but sustained demand yet to materialize.

Foresight News1h ago

Three-Year High Smashes Rate-Cut Hopes, Who's Using CPI to Clean Out Whale Holdings?

Foresight News1h ago

Trading

Spot

Futures