(Bloomberg) -- Cryptocurrency-based predictions market Polymarket is conducting fresh checks to verify that big spenders on its platform are based outside of the US, since people in that country aren’t allowed to trade on the website that has seen a surge in bets favoring Donald Trump to win the presidential election.
Polymarket is in the process of re-checking the details of users of its platform, particularly those making large wagers, to ensure compliance with its rules, said a person familiar with the matter who asked not to be named discussing internal matters.
Scrutiny of Polymarket’s US political markets ticked up significantly in the last month, thanks to a handful of accounts that have spent millions of dollars worth of crypto on bets in favor of Trump’s return to the White House. A Polymarket trader with the username Fredi9999 has wagered more than $18 million on Republican outcomes to date, with almost $13 million alone spent on the platform’s main presidential market, making that trader the largest bettor in that market. The account is also Polymarket’s most profitable of all time.
Fredi9999 is not the only username placing big bets. Blockchain analysis, conducted by sleuths on X known as FozzyDiablo and Domahhhh and corroborated by research firm Arkham Intelligence, suggests that Fredi9999 and three other Polymarket accounts may be controlled by the same person. Spending across all four accounts on Republican outcomes now amounts to over $43 million. None of the accounts are based in the US, according to the person familiar with the matter. The Wall Street Journal reported on the big Trump bets last week.
Betting on the outcome of the US presidential election is New York-based Polymarket’s most popular offering, with more than $2.2 billion in trading volume to date on its main market for this year’s race. Heavy betting on Trump in recent weeks pushed the implied probability of him winning to 64% on Polymarket as of Tuesday. On PredictIt, another predictions market, the probability is 59%, while Kalshi users put the likelihood of a Trump victory at 60%. Meanwhile in voter polls, Trump is trailing his Democratic opponent, Vice President Kamala Harris, 49.3% to 48.5%, according to the RealClearPolitics polling average.
As the US election battle gained pace over the summer, trading on Polymarket skyrocketed. While the platform doesn’t permit US users on its site, the surge included new bets from American traders seeking access to election markets, Bloomberg reported earlier this year. In practice, Polymarket’s system for blocking US users can be circumvented by using virtual private networks, and social media is full of instructions on how to do it.
Traders buy what Polymarket calls “yes” or “no” shares tracking a particular outcome, and the amount of buying and selling of those instruments then determines the implied probability of each outcome at any point in time.
Polymarket was fined by the Commodity Futures Trading Commission in early 2022 after the regulator alleged it had offered illegal trading services. As part of a settlement, the company promised to wind down services in the US while continuing to operate abroad. Meanwhile, a recent court victory for rival Kalshi Inc. over the CFTC has allowed that platform to begin offering local derivatives contracts to bet on the election.
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