The Commodity Futures Exchange Commission is said to be investigating Polymarket, the decentralized prediction market, according to Bloomberg sources.
The news service said that that the derivatives regulator is "investigating whether Polymarket is letting customers improperly trade swaps or binary options and if it should be registered with the agency."
“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry,” a Polymarket rep told Bloomberg.
Polymarket "hasn’t been accused of wrongdoing," according to the report. Bloomberg also said that the company has hired former CFTC enforcement chief James McDonald, now a partner at Sullivan & Cromwell, as part of its response to the investigation.
Polymarket allows users to place speculative bets on certain outcomes, using the stablecoin USDC as a means of transacting. Users can bet on outcomes by purchasing contracts that are cleared on the Ethereum network.
The market raised $4 million in new funding last fall, a development that came just before the U.S. presidential election.
According to Bloomberg's sources, Polymarket is in talks to raise a fresh round of funds at a possible valuation of nearly $1 billion. That would place the firm among the ranks of a growing number of crypto-focused unicorn startups, with an array of companies raising at similar, billion-dollar-plus valuations since the beginning of the year. The outlet also noted that Polymarket has seen the trade of about 4 billion shares since its launch in June 2020.