Report Says Polymarket Users in South Korea Were Flagged for Prosecutors

South Korean police have reportedly referred 18 Polymarket users to prosecutors as part of an illegal gambling investigation that involves 26 suspects and roughly 17.6 billion won (about $12.7 million) in wagers. The case is based on analysis of on-chain activity, according to a report citing data submitted by the National Police Agency.

Authorities say they identified participants by examining publicly available blockchain transactions tied to Polymarket, despite the platform operating without a conventional, real-name user registry. Suspects are accused of placing stakes on event outcomes that—under South Korean legal interpretation—amount to gambling.

Key takeaways

• South Korea’s police have referred 18 Polymarket users to prosecutors, based on an investigation covering 26 people and about 17.6 billion won in wagers.
• Investigators reportedly used publicly available blockchain transaction data to connect individuals to activity on the platform.
• Authorities argue Polymarket transactions fall under South Korea’s Criminal Act as illegal gambling, while users have framed the activity as crypto-based derivatives investment.
• Earlier actions included a June probe and an Aug. 18 decision to block Polymarket after a regulator found the platform’s structure fostered speculative gambling.
• The legal dispute hinges on how “uncertainty” and the structure of trading contracts are characterized under domestic law—especially given Polymarket’s noncustodial, smart-contract design.

How the investigation built from on-chain activity

According to Asia Economy, data provided to Democratic Party lawmaker Yoon Kun-young by the National Police Agency shows that the Gangwon Provincial Police Agency had 26 people under investigation as of Tuesday and had forwarded 18 of them to prosecutors. Asia Economy also reported that the largest wager attributed to a single user was about 5.7 billion won (roughly $4.1 million).

The report says police identified the suspects by analyzing publicly available blockchain transactions. That matters because Polymarket is described as operating on a noncustodial, peer-to-peer model with automated settlement, meaning it does not keep a traditional list of users linked to real-world identities. In other words, the investigation appears to rely on the traceability of transaction patterns rather than on account records maintained by the platform.

Polymarket’s basic premise is that participants can buy and sell contracts tied to real-world event outcomes. When those outcomes resolve, settlement is handled through smart contracts. Asia Economy’s account indicates that investigators nonetheless concluded these contract positions are functionally equivalent to wagering under local law.

The legal argument: gambling vs. derivatives

Authorities reportedly argued that Polymarket transactions constitute illegal gambling under South Korea’s Criminal Act. The basis of that classification, as described in the report, is that users stake assets on outcomes that cannot be predicted with certainty.

Users, however, pushed back. Asia Economy reports that suspects argued Polymarket should be treated as a crypto-based derivatives investment market instead of gambling. That framing reflects a common approach taken by prediction-market operators: trading event-linked contracts can resemble derivatives activity, including the ability to enter and exit positions before a contract settles.

Tae-Lim Kim, a managing attorney at AXIS Law, told Asia Economy that the transactions could meet the legal requirements for gambling. He also said that describing the activity strictly as prediction derivatives may be difficult as a defense in criminal proceedings. At the same time, he suggested that the ability to trade contracts and close positions before settlement could still become relevant for how a court evaluates the overall nature of the activity.

Regulatory pressure escalated before the referrals

The development comes after a visible escalation of South Korean enforcement against Polymarket. In June, Gangwon police launched what was described as South Korea’s first illegal gambling probe into local Polymarket users, acting at the request of the National Police Agency. Earlier coverage from Cointelegraph noted that the case began as an illegal gambling inquiry.

Then, on Aug. 18, South Korean authorities reportedly moved to block Polymarket after determining it provided an illegal gambling environment for users in the country. Cointelegraph previously reported that the blocking decision followed concerns over whether prediction-market activity was being regulated under existing gambling frameworks.

The report also cites the Korea media and communications review commission’s reasoning: it said the platform’s winner-takes-all structure encourages speculative gambling. The commission pointed to Polymarket’s role in operating the markets and setting trading rules, along with the platform’s handling of crypto deposits, withdrawals, settlement, and transaction fees.

Polymarket’s response, as summarized in the report, was that it does not provide Korean-language services or support payments in Korean won. The platform also argued that because transactions are noncustodial and executed via smart contracts, it does not directly manage users’ funds. The regulator rejected the argument, stating that technical design characteristics do not exempt a service from South Korean law.

What this means for users and for prediction markets in South Korea

For market participants, the referral of 18 users to prosecutors signals that enforcement is no longer limited to investigation or takedown efforts—it has moved into the formal legal process. The reported use of blockchain transaction analysis suggests that authorities may be able to map participants even when a platform does not maintain a direct, real-name customer list.

For prediction-market platforms and other “derivatives-like” crypto products, the dispute highlights a structural tension: even if a service is technically noncustodial and settlement is automated, regulators may still assess whether the activity resembles gambling based on how users stake value on uncertain outcomes and how profit is distributed (including whether trading resembles speculation rather than hedging).

Readers should watch whether prosecutors expand the case beyond the initial group of 26 and how courts interpret the defense arguments around derivatives characterization, particularly the practical ability to trade and exit positions before settlement.