Coinbase Inc. (COIN) is warning clients that a U.S. regulator is seeking information about interactions with prediction market firm Polymarket, according to a person familiar with the situation, and Coinbase has sent messages to clients saying the exchange may have to share that data.
Copies of emails shared with some clients have been circulated on social media, and those warnings about requests from the US Commodity Futures Trading Commission (CFTC) are accurate, the person said. The U.S. derivatives regulator has waged a long-running legal battle with prediction market firms, and this latest move comes just days before leadership of the agency will change from Democratic to Republican when President-elect Donald Trump takes office.
“When we receive requests for information from a government, each request is carefully reviewed by a team of trained experts who use established procedures to determine its legal sufficiency,” a Coinbase spokesperson said in an emailed statement, though the company declined to acknowledge receipt of specific subpoena. “If necessary, we will try to narrow requests that are overly broad or vague to provide a more appropriately tailored response, and in some cases we object to producing any information at all.”
The CFTC lost an initial case against the prediction market firm Kalshi when a US federal judge ruled late last year that the agency could not prevent the company from listing election contracts. However, the regulator quickly appealed to a higher court, and Polymarket argued in the new legal clash that only Congress can stop electoral betting.
Read more: US election betting: Federal court ‘wronged’ to let Kalshi launch prediction markets, CFTC says
Neither the CFTC nor Polymarket immediately responded to a request for comment on the effort to collect customer information.
On January 20, Trump will regain the White House and he will be able to appoint a new chairman to replace Rostin Behnam, who has led the CFTC during its long legal battle with the prediction companies. Incumbent Republican commissioners Caroline Pham and Summer Mersinger have attracted attention as potential candidates for the open chairmanship, as has former commissioner Brian Quintenz.
