South Korean Authorities Forward 18 Polymarket Participants to Prosecution: Investigation Report
Law enforcement officials in South Korea have forwarded 18 individuals who used Polymarket to prosecutorial authorities as part of an illegal gambling investigation encompassing 26 individuals and approximately $12.7 million in wagers.
Law enforcement officials in South Korea have forwarded 18 individuals who utilized Polymarket to prosecutorial authorities as part of an investigation into illegal gambling activities that encompasses 26 individuals who placed combined wagers totaling approximately 17.6 billion won (equivalent to $12.7 million).
As reported by Asia Economy, information provided by the National Police Agency to Democratic Party lawmaker Yoon Kun-young's office revealed that the Gangwon Provincial Police Agency had placed 26 individuals under active investigation as of Tuesday and forwarded 18 of those individuals to prosecutorial authorities. According to the report, the highest individual wager placed by any single participant amounted to approximately 5.7 billion won ($4.1 million).
Law enforcement officials identified the users through analysis of publicly accessible blockchain transaction data, according to the report. Polymarket enables participants to purchase and sell contracts linked to real-world event outcomes and functions on a noncustodial, peer-to-peer framework with automated settlement processes. The platform does not keep a traditional registry of users identified by their legal names, the report stated.
Law enforcement officials reportedly stated that Polymarket transactions qualify as illegal gambling under the provisions of South Korea's Criminal Act due to users placing assets at risk on outcomes that cannot be determined with certainty. The users countered that Polymarket should be classified as a cryptocurrency-based derivatives investment platform instead, the report indicated.
South Korea moves against Polymarket
In June, law enforcement officials from Gangwon province initiated South Korea's inaugural illegal gambling investigation targeting domestic Polymarket users following a request from the National Police Agency. On Aug. 18, government authorities in South Korea took action to restrict access to Polymarket following a determination that the prediction market platform created an illegal gambling environment for users within the nation.
The nation's media and communications review commission indicated that the platform's winner-takes-all framework promoted speculative gambling behavior, pointing to Polymarket's function in facilitating markets, establishing trading regulations, enabling crypto deposits, withdrawals, and settlement processes, and collecting transaction fees from users.
Polymarket maintained that it did not offer Korean-language interface options or facilitate payments in Korean won and that its noncustodial transaction model and utilization of smart contracts indicated it did not have direct control over user funds. The commission dismissed this argument, stating that technical features did not provide exemption from South Korean legal jurisdiction.
Tae-Lim Kim, managing attorney at AXIS Law, informed Asia Economy that the transactions could satisfy the legal criteria for gambling activities. He indicated that characterizing them as prediction derivatives would be challenging to employ as a direct legal defense in criminal proceedings, though the capability to trade contracts and exit positions prior to settlement might be considered relevant to a court's evaluation.