Polymarket Faces Scrutiny Over Response to $10 Million Fraud Attempt on Its US Platform

Polymarket is under scrutiny after a fraud scheme on its US debit-card rails triggered rejection rates that reportedly topped 80%, far above the roughly 1% industry norm. For PSPs and high-risk operators, the interesting part is not just the fraud itself, but the compliance trade-off the company was described as making while trying to keep growth moving.

1. According to a Wall Street Journal report published September 20, fraudsters in February 2026 attached stolen debit cards to thousands of new Polymarket accounts, placed bets, and tried to withdraw the proceeds to accounts they controlled. Checkout.com, which handled Polymarket’s US debit-card transactions, flagged the activity and began rejecting deposits at an unusual rate.
2. At the peak of the incident, more than 80% of incoming deposits were rejected as fraudulent, versus an industry norm of roughly 1%. The attempted fraud totaled at least $10 million, although that figure reflects what the attackers tried to withdraw rather than confirmed losses. According to people familiar with the events, seven users accounted for most of the suspicious activity, and one account made close to 4,000 deposits.
3. The Journal said that when Polymarket’s compliance team raised the issue with CEO Shayne Coplan, his response was to keep growing the business and deal with any fine later if regulators intervened. Current and former employees described that as part of a broader company culture centered on growth. Polymarket also loosened a prior safeguard that required withdrawals to go back to the same payment source used for deposits, which is a common anti-money-laundering control.
4. Some employees warned that removing that safeguard could increase money-laundering risk, while executives said other internal controls were sufficient. Former CFTC enforcement lawyer Joe Konizeski told the Journal that the scale of the issue was unusual for a regulated platform: “In the regulated space, this kind of thing does not happen,” he said.
5. The Commodity Futures Trading Commission is investigating Polymarket, and employees have reportedly been told to preserve records related to the fraud incident and other matters. The company is also facing nearly two dozen trader lawsuits alleging deceptive practices, while more than a dozen state cases are examining whether prediction markets operated by Polymarket and competitors such as Kalshi and Coinbase amount to unlicensed gambling. New York City officials are separately reviewing advertising practices across the sector.

The timing matters. Polymarket is pursuing a new funding round at a reported valuation of about $21 billion, after entering the regulated US market by acquiring a licensed exchange for $112 million. Its American platform reportedly drew more than $500 million in deposits after opening to early users in December. The company previously paid a $1.4 million fine in a separate matter, which gives compliance teams another data point on how expensive regulatory cleanup can become once growth outruns controls.