CFTC Investigation Into Polymarket: 70% of Promo Videos Were Fake Trades

The Commodity Futures Trading Commission has opened a broad investigation into Polymarket, the prediction market platform that has been navigating a complicated relationship with US regulators for years. The inquiry, confirmed by a source familiar with the matter and reported by both Bloomberg and CNBC, covers Polymarket’s business activities as well as its social media operations — a scope that goes well beyond the marketing controversy that recently brought the company into public view.

Key takeaways

• The CFTC has launched an extensive, ongoing investigation into Polymarket’s business activities and social media operations, according to sources familiar with the inquiry.
• A Wall Street Journal review of 1,105 promotional videos found that roughly 70% contained simulated trades rather than real market activity, generating over 140 million views on TikTok, YouTube, and Instagram.
• Content creators were reportedly paid $2,000 to $3,000 per month through marketing contractor Virality and were told not to disclose the sponsorships.
• Polymarket has been barred from serving US users since a 2022 CFTC settlement, though it launched a regulated US exchange in December to restore domestic access.
• This marks the first major CFTC investigation into an event contract platform under Chair Michael Selig, whose tenure has otherwise been supportive of prediction markets.

What the CFTC investigation into Polymarket actually covers

The investigation is active and extensive, though neither the CFTC nor Polymarket has issued an official statement. A source familiar with the matter told CNBC the inquiry is ongoing, without disclosing when it began. Bloomberg separately reported that the probe extends beyond Polymarket’s social media marketing practices into other parts of the company’s operations — a detail that signals regulators are taking a wide-angle view of the platform’s conduct.

The timing matters. This probe comes shortly after the CFTC and the US Department of Justice dropped a previous investigation into Polymarket without charges in July of last year. That earlier case centered on whether Polymarket was improperly allowing US users to access its platform. The new investigation represents a distinct and potentially more consequential line of scrutiny.

A regulator known for supporting prediction markets turns toward enforcement

What makes this particularly notable is who is running the CFTC. Chair Michael Selig has generally been viewed as one of the more prediction market-friendly regulators in the agency’s recent history. His tenure has been marked by active support for event contract platforms, including legal battles against states seeking to restrict them. Against that backdrop, opening a high-profile investigation into the sector’s best-known platform sends an unmistakable signal that even a supportive regulatory posture has limits when marketing conduct is called into question.

Allegations of deceptive marketing practices

The investigation follows a Wall Street Journal exposé detailing what the newspaper described as a systematic campaign of misleading promotional content. The Journal reviewed 1,105 videos posted between December 2025 and mid-May and found that approximately 70% contained simulated trades rather than actual market activity. Polymarket allegedly used replica versions of its trading platform to stage fake bets and fabricated winnings in these videos — trades that would have resulted in losses if placed on the live platform.

The financial scale of the alleged deception is striking. The campaign reportedly displayed around $1.9 million in fake bets, including nearly $900,000 in fabricated winnings. Those numbers were not reflective of real outcomes — they were constructed to make the platform look more attractive and profitable to prospective users.

Undisclosed influencer payments and a 140-million-view campaign

The promotional reach was substantial. Analytics firm Tubular estimated the videos accumulated more than 140 million views across TikTok, YouTube, and Instagram. The content creators behind these videos were reportedly paid between $2,000 and $3,000 per month through a marketing contractor called Virality. Critically, they were reportedly instructed not to disclose that the content was sponsored — a direct violation of standard influencer marketing disclosure norms and, potentially, of federal advertising rules.

The combination of fabricated trading results and concealed sponsorship payments is exactly the kind of conduct that triggers regulatory attention. For users drawn in by those videos, the implication is stark: what looked like authentic wins from real traders was, in many cases, staged content funded by the company itself.

Polymarket’s response and compliance efforts

Polymarket’s public response has been measured. The company told CNBC it is conducting a comprehensive audit of its active promotional content to ensure compliance with its own internal standards as well as applicable regulatory and legal disclosure requirements. The audit signals the company is taking the allegations seriously, even without admitting wrongdoing. However, details of what that audit entails and what it has found remain undisclosed.

From 2022 ban to a regulated US exchange

Polymarket’s history with US regulators adds important context. The company was barred from serving American users following a 2022 settlement with the CFTC, after it failed to properly register with the regulator. Despite that ban, some US users reportedly continued accessing the platform through virtual private networks.

The company has been actively working to repair that relationship. In December, Polymarket launched a CFTC-regulated US exchange specifically designed to restore legitimate access for domestic users, and it lifted the waitlist for the platform roughly six weeks before the current investigation became public. The timing of the investigation surfacing so soon after those steps toward regulatory compliance creates an uncomfortable juxtaposition for the company.

Political scrutiny adds another layer

The regulatory pressure is now being amplified by Congress. Senators Adam Schiff and John Curtis last week sent a letter to CFTC Chair Michael Selig asking him to confirm whether the agency had opened an investigation into Polymarket’s advertising practices. Their letter also pressed Selig to explain how the CFTC has enforced the 2022 settlement’s restrictions on US users — a question that takes on added weight given the reported VPN workarounds.

Beyond the specific Polymarket questions, the senators raised something broader: whether the CFTC currently has sufficient oversight tools to supervise prediction markets at all. They requested details on the agency’s advertising standards, influencer disclosure rules, consumer safeguard frameworks, and age verification requirements. That line of questioning suggests the investigation may be a catalyst for a wider policy debate about how event contract platforms are regulated — and whether existing frameworks are adequate for the speed and scale at which social media marketing can reach consumers.

For Polymarket, the path forward involves managing a multi-front challenge: an active federal investigation, a congressional inquiry, public allegations of deceptive marketing, and the reputational stakes of being the first major platform put under the microscope by a CFTC chair who was supposed to be an ally. Whether the audit it is currently conducting translates into concrete accountability — or simply into procedural compliance — may well determine how far regulators decide to push.

FAQ

What is the scope of the CFTC investigation into Polymarket?

The CFTC’s investigation covers Polymarket’s business activities broadly, including its social media operations and promotional practices. According to Bloomberg, the probe extends beyond the marketing campaign that triggered initial scrutiny into other aspects of the company’s operations.

What deceptive practices is Polymarket accused of in its marketing?

Polymarket is accused of using fake trading videos featuring simulated bets and fabricated winnings, created using replica versions of its platform. It is also accused of paying content creators between $2,000 and $3,000 per month through contractor Virality without requiring them to disclose the sponsorship — a practice that generated over 140 million views across TikTok, YouTube, and Instagram.

How is Polymarket responding to the investigation and allegations?

Polymarket told CNBC it is conducting a comprehensive audit of its active promotional content to ensure compliance with regulatory and legal disclosure standards. The company has not issued a formal statement directly addressing the CFTC investigation.

What efforts has Polymarket made to comply with US regulations?

Following a 2022 settlement with the CFTC that barred US users from its main platform, Polymarket launched a CFTC-regulated US exchange in December to restore legitimate domestic market access. The platform’s waitlist was lifted approximately six weeks before the current investigation became public.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.