South Korean police have reportedly referred 18 Polymarket users to prosecutors in an illegal gambling investigation involving 26 people who collectively wagered about 17.6 billion won (worth $12.7 million).
According to Asia Economy, data submitted by the National Police Agency to the office of Democratic Party lawmaker Yoon Kun-young showed that the Gangwon Provincial Police Agency had placed 26 people under investigation as of Tuesday and sent 18 of them to prosecutors. The report said the largest amount wagered by a single user was about 5.7 billion won ($4.1 million).
Police identified users by analyzing publicly available blockchain transactions, the report said. Polymarket lets users buy and sell contracts tied to the outcomes of real-world events and operates on a noncustodial, peer-to-peer structure with automated settlement. It does not maintain a conventional list of users by their real names, the report said.
Authorities reportedly said Polymarket transactions constitute illegal gambling under South Koreas Criminal Act because users stake assets on outcomes that cannot be predicted with certainty. The users argued that Polymarket should instead be treated as a crypto-based derivatives investment market, according to the report.
South Korea moves against Polymarket
In June, Gangwon police launched South Koreas first illegal gambling probe into local Polymarket users at the request of the National Police Agency. On Aug. 18, South Korean authorities moved to block Polymarket after determining that the prediction market provided an illegal gambling environment to users in the country.
The country‘s media and communications review commission said the platform’s winner-takes-all structure encouraged speculative gambling, citing Polymarkets role in operating markets, setting trading rules, providing crypto deposits, withdrawals, and settlement and collecting transaction fees.
Related: CFTC, US soldier accused of illegal Polymarket bet spar over interpretation of prediction markets
Polymarket argued that it did not provide Korean-language services or support payments in Korean won and that its noncustodial transactions and use of smart contracts meant it did not directly manage user funds. The commission rejected the argument, saying technical characteristics did not exempt a service from South Korean law.
Tae-Lim Kim, managing attorney at AXIS Law, told Asia Economy that the transactions could meet the legal requirements for gambling. He said describing them as prediction derivatives would be difficult to use as a direct defense in criminal proceedings, although the ability to trade contracts and exit positions before settlement could be relevant to a courts assessment.
Magazine: Revolut ID thefts highlight KYC‘s dangers: Here’s how to fix it