Two Polymarket traders, William Wood and Thomas Bush, have sued the prediction market platform for breach of contract. The dispute is linked to the market tracking whether Strategy would sell Bitcoin by May.
Per the filing, Wood and Bush held the ‘Yes’ share of the binary market, betting that Strategy would sell BTC by the 31st of May. Indeed, the firm confirmed it sold 32 BTC in a SEC filing between 26th and 31st May.
Instead of resolving the market to ‘Yes’ based on the disclosure, the platform added new language and concluded it was a ‘No’ after a final review by UMA vote. For Wood and Bush, this was a breach of contract.
Plaintiffs allege Polymarket breached contract
The plaintiffs, represented by Burwick Law, noted that Polymarket posted new “clarifying” language after the disclosure. The question was now reframed from whether Strategy sold Bitcoin by the 31st of May to whether the sale was publicly confirmed by May 31st.
They added,
A prediction market that will honor a proven, unambiguous event does not sell truth; it controls payout.
They asserted a breach of contract by the platform. Wood clarified that a total of $6.5M was lost by 1,868 traders who held ‘Yes’ shares.
In June, Galaxy Research also slammed Polymarket over the issue, calling the ‘No’ market resolution a ‘failure.’
Everyone who bought YES predicted the future correctly, and the market just told them they were wrong. That is a failure.
As of writing, Polymarket had not issued any public response to the lawsuit.
For Thomas Braziel, a policy analyst, the case could be one of the most ‘consequential lawsuits’ in the prediction market, as UMA dispute practices could be reviewed.
The sector has seen increased scrutiny and lawsuits covering ethics, insider trading, and the oversight battle between local states and federal regulator CFTC.
In fact, the CFTC is advancing a clear framework for the sector. Whether the Burwick lawsuit outcome will help refine parts of the proposed prediction markets framework remains to be seen.
Final Summary
- Two traders have sued Polymarket for breach of contract and deceptive practices that led to a total loss of $6.5M.
- Policy analyst projected that the case could be ‘consequential’ if it clears key procedural hurdles.
