In early November, Shayne Coplan had a week he will remember for the rest of his life: He received a phone call from the highest levels at Mar-a-Lago. He was on TV for the first time. And his apartment in New York City was raided by the FBI.
These eventful days underscore the precarious position of both Coplan, 26, and his startup Polymarket, the online prediction market that has become a household name in the final few months of the campaign. president—and in the days and hours leading up to election night. , predicts the outcome more accurately than most polls.
In an interview with Luck Earlier this week, Coplan expressed excitement about what he has accomplished and his company’s future. “I learned that anything is possible,” he said. “Turning dreams into reality has never been more tangible, and luckily, I’m a dreamer. The world is shaped and changed by optimists.”
On Wednesday, however, Coplan’s tone changed. After the FBI confiscated His phone and laptop, he brought with him X and challenge tweeted that the raid was baseless and motivated by vengeful political forces upset by the election results.
The legal situation is still evolving. The FBI declined to comment; Coplan and his lawyers have insisted the founder did nothing wrong, and neither side has explicitly said what Coplan might be under investigation for—though it should be noted that Polymarket is subject to federal oversight. consent decree does not offer certain predictable contracts to U.S. residents.
Polymarket declined to comment for this story, noting only that Coplan has also appeared at recent Democratic events, including one with vice presidential candidate Tim Walz. (Coplan also tweeted that he is nonpartisan.)
But how the investigation plays out could determine whether Polymarket will cement its position as a major new force in American politics or whether Coplan and his company have flown too close to the sun and opened their doors. for a competitor to take their place.
A political giant and a VC darling
On election night, Donald Trump’s campaign team became increasingly jubilant as Polymarket graphs – reflecting the betting activity of tens of thousands of bettors around the world – showed the gap between the candidate of they and Kamala Harris are getting wider. When the initial results came in, that gap became a chasm. The next day, Trump’s golf buddy Zach Witkoff congratulations Coplan on X, said everyone at Mar-a-Lago—including the President-elect—used Polymarket to gauge the election; one of the most senior figures in Trump’s orbit also called Coplan to congratulate him.
Polymarket exploded this year, but the idea behind it is centuries old and reflects a notion popularized in the book Wisdom of the crowdCrowdsourcing a question can yield very accurate results. In fact, Polymarket users can visit the site and bet on the outcome of many different events. For example, on November 14, bettors can bet 70 cents on forecast that Bitcoin price will reach $100,000 this year; if correct, that 70-cent bet would win a dollar. In theory, the larger the crowd, the more accurate the prediction.
For weeks, Polymarket has enjoyed a prophet-like status both in Trump world and among a growing segment of the political class. This website showed remarkable foresight when predicting Trump’s selection of JD Vance as his Vice Presidential candidate and Joe Biden’s dropout. Indeed, Polymarket’s stature has grown so much that the country’s most famous pollster, Nate Silver, decided to join the company in July. During the final three months of the campaign, polls The tradition has been hot, often showing Trump or Harris with a near lead or a lead within the margin of error. But Polymarket continually shows Trump at odds winning by a margin of 60% or higher—prompting some experts to praise the site and its founder when the former president won.
Election-related prediction markets have been banned by the U.S. Commodities and Futures Trading Commission for decades. However, the legality of the CFTC ban has been questioned in recent years; A federal district court recently ruled that the ban does not apply to Kalshia competitor of Polymarket and other prediction sites have been encouraged to tout their services more aggressively.
Coplan is considered the face of the emerging industry. He grew up in New York CityThe son of academic parents, and has distinctive wavy hair that gives him the impression of being in an alt-rock band. A self-described “nerd guy,” Coplan was very interested in probability in high school, leading him to found Polymarket at age 21. The site stood out in part because it relied on blockchain to track betting, with users using stablecoin USDC for payments or withdrawals.
Although Polymarket didn’t become a household name until this year, the company’s investors include famous crypto stars like Ethereum founder Vitalik Buterin and former Coinbase CTO Balaji Srinivasan. The startup is also backed by venture capital firms such as DragonFly and Peter Thiel’s Founders Fund.
To date, Polymarket has raised $74 million and has a staff of about 30 people. While venture capitalists like to claim they are unloved among the companies in their portfolios, the host of a VC dinner in Manhattan this summer discreetly identified “he Polymarket guy” will Luck is the most important participant.
Accurate but controversial prediction
When Polymarket became the go-to place for election coverage, it also came under scrutiny. Skeptics point out that US citizens are banned from using the platform, meaning the prediction data comes from foreigners, not Americans. Others asked whether its predictions were skewed because of the site’s popularity among cryptocurrency users, who lean largely to the right politically.
There’s also the issue of wash trading – a term that describes someone who takes both sides in a transaction, often in the hope of artificially increasing liquidity or trying to game the outcome. Before the election, Polymarket’s competitors approached multiple reporters with data purporting to show that the site’s transaction data was unreliable. Luck proceed its own investigationcontacted two independent forensics firms to analyze blockchain data and found that approximately 30% of Polymarket’s transactions consisted of wash trading. In his conversation with Luck This week, Coplan criticized Fortune’s findings and other stories about unusual data patterns as ill-informed “kicks.”
In any event, the impact of money-laundered transactions on Polymarket is unclear. Despite concerns by some that bettors could manipulate betting markets to influence the election, there is no evidence that this happened. According to WilmerHale securities attorney Matthew Beville, who co-published a recent article on prediction markets, wash trading on Polymarket (not a client) may have a more prosaic explanation: The transactions may reflect users looking to increase activity on the platform in hopes of receiving an “air drop”—a cryptocurrency term that describes a project that issues tradable tokens for loyal users. The company declined to comment on whether such tokens are part of its plans.
Coplan may justifiably feel vindicated about Polymarket’s performance following the election results, but questions remain about its website and business model. First, trading activity on the site has plummeted since the presidential election, meaning growing regular business outside of major political events can be difficult. Meanwhile, popular trading platform Robinhood has attracted millions of bets newly launched prediction platform—suggesting Polymarket could face much greater competition in upcoming election cycles.
Then there is the question of revenue. Unlike Kalshi and others, Polymarket does not charge commission. So far, the company is unclear about how it will pay for its ongoing operations. One option could be to charge companies or political candidates to make private bets on the site to help them gauge future events. Another is to issue its own cryptocurrency token — a prospect that suddenly seems more viable after the recent attack on the White House and Congress by crypto-friendly Republicans Much more deadly than the Democratic Party.
The FBI could wait until after the election
For now, however, questions remain about the FBI investigation and what it might portend for the future for both Coplan and Polymarket.
“new phone. Who is he? Coplan wrote on Trump. Coplan’s tweets followed soon after New York Post Office first broken news about the raid in a sympathetic account.
The FBI search warrant on which it was based has not yet been made public and no indictments have been filed. Therefore, it is impossible to know the exact allegations against Coplan and Polymarket. A good crypto lawyer who spoke with Luck speaking on condition of anonymity to protect his professional relationships, puts the incident into context.
Industry attorneys have been expecting federal action for months in response to what appeared to be Polymarket’s sloppy compliance practices, according to the lawyer. The attorney said any charges could be related to allowing Americans to trade on the platform, which would violate a 2021 consent decree with the CFTC. That decree considers Polymarket a regulated entity, subject to laws that require contract marketplaces to collect data on their customers and report suspicious activity. In recent months, the company appears to have breached its obligations by displaying its logo at events and events in the United States. recruitment American social media influencers to promote the website.
The crypto lawyer compared Coplan’s social media behavior to that of FTX founder Sam Bankman-Fried in response to the SBF indictment — defiant but also stupid. Indeed, attorneys believe the FBI may have chosen to wait until after the election to make targeted arrests stay away Seems political.
The defiant response so far by Coplan and Polymarket may reflect—appropriately enough—a bet that regulators will decline to react to Polymarket’s popularity with the incoming administration.
Coplan’s tweet describing the FBI raid as a vengeful move by the Biden administration received support from powerful figures in Trump world, including Elon Musk, who replied “Really So”. Coplan in turn responded to Musk by simply posting an eagle emoji.
