In early November, Shayne Coplan experienced a week he will remember for the rest of his life: He received a call from the highest echelons of Mar-a-Lago. He appeared on television for the first time. And his New York apartment was raided by the FBI.
The eventful days underscore the precarious position of both 26-year-old Coplan and his startup Polymarket, the online prediction marketplace that became a household name in the final months of the presidential campaign — and in the days and hours leading up to election night — that forecasts Result more accurate than most surveys.
In an interview with Assets Earlier this week, Coplan said he was delighted with what he had achieved and the future of his company. “I learned that anything is possible,” he said. “Turning dreams into reality has never felt so tangible, and luckily I’m a dreamer. The world is shaped and changed by optimists.”
On Wednesday, however, Coplan’s tone changed. According to the FBI confiscated He took his phone and laptop with him X and defiant tweeted that the raid was unfounded and driven by vindictive political forces angered by the election results.
The legal situation is still developing. The FBI declined to comment; Coplan and its lawyers have maintained that the founder did nothing wrong, and neither side has specifically said what Coplan could be investigated for — although it’s worth noting that Polymarket is subject to federal court Consent Decree Not to offer certain forecast contracts to US citizens.
Polymarket declined to comment for this story, citing only that Coplan has also appeared at recent Democratic events, including one with vice presidential candidate Tim Walz. (Coplan also tweeted that he is impartial.)
But the course of the investigation could determine whether Polymarket will cement its place as a major new force in U.S. politics — or whether Coplan and his company have flown too close to the sun, opening the door for a competitor to take their place takes.
A political giant and a VC darling
On election night, Donald Trump’s campaign team cheered more and more as Polymarket graphs – reflecting the betting activity of tens of thousands of bettors worldwide – showed the spread between their candidate and Kamala Harris widening. When the first results came out, that range became a chasm. The next day, Trump’s golf friend Zach Witkoff congratulated Coplan to One of the highest-ranking figures in Trump’s circle also called Coplan to congratulate him.
Polymarket first appeared this year, but the idea behind it is centuries old and reflects an idea popularized in the book The wisdom of the crowdsthat crowdsourcing a question can provide very accurate results. In practice, Polymarket users can visit the site and bet on the outcome of various events. For example, on November 14th, bettors could bet 70 cents on it forecast that the price of Bitcoin will reach $100,000 this year; If the bet were correct, that 70 cent bet would win a dollar. Theoretically, the larger the quantity, the more accurate the prediction.
For weeks, Polymarket had assumed an oracle-like status in both Trump world and a growing segment of the political class. The site had already shown remarkable foresight by predicting that Trump had chosen JD Vance as his vice presidential running mate and that Joe Biden would drop out. In fact, Polymarket’s importance had grown so much that the country’s most famous pollster, Nate Silver, decided to join the company in July. In the final three months of the campaign, traditional polls fluctuated wildly, typically showing Trump or Harris either nearly tied or with a lead within the margin of error. But Polymarket has consistently shown up Trump with chances a win rate of 60% or more — which led some pundits to glorify the site and its founder when the former president won.
Election-related prediction markets have been banned in the United States for decades by the Commodities and Futures Trading Commission. 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 Kalshia Polymarket competitor, and other prediction sites have since been encouraged to advertise their services more aggressively.
Coplan is the face of the emerging industry. He grew up in New York CityThe child of academic parents, he sports a signature basket full of bouncy curls that give him the air of an alternative rock band member. A self-proclaimed “nerd,” Coplan became deeply interested in probability theory in high school, which led to him founding Polymarket at age 21. Among other things, the website stands out because it is based on blockchain to track stakes and users can cash out or cash out using the stablecoin USDC.
Although Polymarket only became a household name this year, the company’s investors include crypto luminaries such as Ethereum founder Vitalik Buterin and earlier Coinbase CTO Balaji Srinivasan. The startup is also backed by venture capital firms such as DragonFly and Peter Thiel’s Founder’s Fund.
So far, Polymarket has raised $74 million and employs around 30 people. While VCs like to claim they have no favorites among their portfolio companies, the organizer of a VC dinner in Manhattan this summer discreetly identified “the polymarket guy.” Assets as the most important participant.
Accurate but controversial predictions
As Polymarket became a staple of election coverage, it also came under fire. Skeptics pointed out that US citizens are banned from using the platform, meaning the prediction data came from foreigners, not Americans. Others questioned whether the predictions might be biased due to the site’s popularity among crypto users, who lean predominantly right-wing politically.
There was also the issue of wash trading – a term that describes one person taking both sides of a trade, often in the hopes of artificially increasing liquidity or manipulating the outcome. Before the election, Polymarket’s competitors contacted numerous reporters with data that allegedly showed the site’s trading data was unreliable. Assets carried out an own investigationturned to two independent forensic firms that analyzed blockchain data and found that about 30% of Polymarket’s trades consisted of wash trading. In his conversation with Assets This week, Coplan called Fortune’s findings and other stories about unusual data patterns ill-informed “hit pieces.”
In any case, the impact of wash trading on Polymarket is unclear. Despite fears from some that bettors could manipulate betting markets to influence an election, there is no evidence that this has happened. According to Matthew Beville, a securities attorney at WilmerHale who recently co-authored an article on prediction markets, there may be a more mundane explanation for the wash trading on Polymarket (which is not a client): The trades could be due to users increasing their activity want to join the platform in hopes of receiving an “air drop” – a crypto term that describes a project that issues a tradable token to loyal users. The company declined to comment on whether such tokens are part of its plans.
Coplan may rightly feel vindicated about Polymarket’s performance following the election results, but there are still questions about the site and its business model. First, trading activity on the site has plummeted since the presidential election, meaning it could prove difficult to establish a regular business outside of major political events. Meanwhile, popular trading platform Robinhood attracted millions of bets own newly introduced ones Prediction platform – suggesting that Polymarket could face much stiffer competition in the upcoming election cycles.
Then there is the question of revenue. Unlike Kalshi and others, Polymarket does not charge commissions. The company has so far been cautious about financing its continued operations. One option could be to hire companies or political candidates to make customized bets on the site to help them assess future events. Another would be issuing its own crypto token — a prospect that suddenly seems more realistic given the recent capture of the White House and Congress by Republicans who were far more crypto-friendly than Democrats.
The FBI probably waited until after the election
For now, however, there is the question of the FBI investigation and what it could mean for both Coplan and Polymarket going forward.
“New phone. Who is this?” Coplan wrote on Wednesday afternoon. Coplan’s tweets came shortly after New York Post broken first News the raid in a sympathetic report.
The warrant on which the FBI search should have been based is not yet public and no charges have been filed. Therefore, it is not possible to know the exact allegations against Coplan and Polymarket. A well-placed crypto lawyer who spoke to Assets on the condition that he wishes to remain anonymous to protect his professional relationships, put the incident in context.
According to the lawyer, industry lawyers had been anticipating for months that federal regulators would take action in response to Polymarket’s seemingly heavy-handed compliance measures. The lawyer said any charges would likely be related to allowing Americans to trade on the platform, in violation of a 2021 consent agreement with the CFTC. This decree treats Polymarket as a regulated company subject to laws that require contractual markets to collect data about their customers and report suspicious activities. In recent months, the company has appeared to be violating its commitments by displaying its logo at events in the US set American social media influencers promote the website.
The crypto lawyer compared Coplan’s social media behavior to that of FTX founder Sam Bankman-Fried before the SBF indictment – defiant but also stupid. In fact, the lawyer believes the FBI likely decided to wait until after the election to make the seizures avoid appear political.
Coplan and Polymarket’s defiant response so far may – fittingly – reflect a bet that regulators will step down in response to Polymarket’s popularity with the new government.
Coplan’s tweet, in which he described the FBI raid as a vengeful move by the Biden administration, already received support from powerful figures in the Trump world, including Elon Musk, who responded with “Indeed.” Coplan, in turn, responded to Musk and simply posted the symbol of an eagle.