Faked Trades, Clone Websites, 1105 Videos: Polymarket Under CFTC Scrutiny
The U.S. Commodity Futures Trading Commission (CFTC) has launched a wide-ranging investigation into prediction market platform Polymarket. The probe, triggered by a Wall Street Journal report, focuses on allegations of systematic marketing fraud. The report revealed Polymarket allegedly hired dozens of student content creators to post over 1,100 videos showing fake, profitable trades on cloned websites, without disclosing the paid relationships. These videos, with over 140 million views, were pivotal to user growth.
Simultaneously, the National Association of Consumer Advocates (NACA) filed a lawsuit in Washington D.C., accusing Polymarket and its executives of deceptive advertising targeting college students. The suit details off-campus promotions and payments made through the CMO's personal PayPal account to influencers who failed to disclose sponsorships.
The investigation places CFTC Chairman Michael Selig in a difficult position, as he has been a vocal advocate for prediction markets and is currently suing multiple states to assert federal jurisdiction over them. This case tests the CFTC's dual role as both promoter and enforcer.
This marks Polymarket's second major clash with the CFTC. After a 2022 settlement and U.S. ban, it regained approval to operate in September 2025, secured a $20 billion investment, and saw its valuation soar. The current crisis, compounded by a recent $3.1 million front-end supply chain attack, represents the platform's most severe multi-front challenge since its founding.
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