Polymarket Faced $10M Fraud Attempt as Compliance Concerns Grew: WSJ

TLDR

• Fraudsters allegedly tried to steal at least $10 million from Polymarket US using stolen debit cards in February.
• At one stage, payment processor Checkout.com reportedly rejected more than 80% of deposits it handled as fraudulent.
• The Wall Street Journal reported that CEO Shayne Coplan told staff to keep focusing on growth despite compliance concerns.
• Polymarket later tightened anti-fraud controls and reportedly brought fraud rates back toward industry norms by May.
• The company is seeking about $1 billion in new financing at a valuation near $21 billion while preparing for a possible IPO.

Polymarket faced an attempted fraud scheme worth at least $10 million earlier this year as criminals used stolen debit cards on its U.S. prediction market platform, according to a Wall Street Journal investigation.

WSJ: Polymarket CEO Reportedly Told Staff to Keep Growing and Pay a Fine if Regulators Found Out Amid $10M Stolen-Card Fraud Attempt

The Wall Street Journal reported that fraudsters linked stolen debit cards to Polymarket US accounts in February, attempting to move at least $10… pic.twitter.com/hbBJEJF3Fi

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The attack began in February, shortly after Polymarket US started opening its service to more users.

Fraudsters allegedly linked stolen debit cards to accounts, placed wagers and then tried to withdraw the money to other cards or accounts they controlled.

At one point, payment processor Checkout.com rejected more than 80% of deposits it handled as fraudulent, compared with an industry level of roughly 1%, according to the report.

Polymarket Faced $10 Million Fraud Attempt

Most of the attempted deposits reportedly failed.

One person familiar with the incident said around seven users were responsible for much of the activity, with one account attempting about 4,000 deposits.

The Journal did not determine exactly how much of the attempted $10 million theft succeeded.

Employees reportedly raised concerns about the attack with CEO Shayne Coplan.

People familiar with the discussions told the Journal that Coplan responded by telling staff to continue focusing on growth and deal with any regulatory consequences later. Polymarket has said it is committed to fair markets and cooperation with regulators and law enforcement.

The attack also contributed to delays in customer withdrawals as compliance staff dealt with the volume of suspicious activity.

Polymarket leadership later removed a rule requiring funds deposited through one payment source to be withdrawn through the same source.

Some employees warned that removing the safeguard could increase money-laundering risks, according to the report.

Polymarket Tightens Fraud Controls

Polymarket later introduced stronger controls.

By May, fraud rates had returned to industry norms, according to a person familiar with the company’s operations.

Measures included limiting how many debit cards could be connected to an account and bringing in fraud-prevention company Riskified.

Several senior employees also left during the period.

Polymarket US Chief Compliance Officer Andrew Clifford resigned in April after submitting a report outlining fraud concerns.

The company later dismissed U.S. CEO Justin Hertzberg, while senior regulation and anti-money-laundering executives also departed.

A review by law firm Sullivan & Cromwell concluded that Polymarket had complied with regulations, according to people familiar with the findings.

Polymarket faced another security incident in July when nearly 500 users were reportedly affected by an account-registration flaw.

Attackers using stolen personal information could allegedly gain access to existing accounts and linked payment methods without knowing usernames or passwords. Polymarket said it would cover lost funds.

Polymarket Eyes Funding and Possible IPO

The incidents come as Polymarket seeks roughly $1 billion in financing at a valuation of around $21 billion.

1789 Capital is contributing about $300 million to the round after previously investing roughly $200 million, according to the Journal and The Block.

Coplan has also discussed preparations for a possible 2027 IPO and the company has hired former Amazon finance chief Warren Jenson as its first CFO.

Polymarket says it has strengthened risk management, compliance procedures, product testing and leadership as it prepares for further growth.