Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
Polymarket, known for allowing users to place bets on the outcomes of various events, has secured $70 million in funding across two rounds, with the most recent led by billionaire investor Peter Thiel‘s Founders Fund.
What Happened: Other notable backers include Ethereum (CRYPTO: ETH) co-founder Vitalik Buterin.
This comes despite a proposed ban on event-based prediction contracts by the Commodity Futures Trading Commission (CFTC), the main US derivatives regulator.
The platform has seen a surge in users predicting various event outcomes, with the 2024 U.S. presidential election emerging as the most popular contract.
Previously, Polymarket faced fines from the CFTC and agreed to cease its U.S. operations while continuing abroad.
"A lot of the reason why certain people don't like prediction markets in the US kind of dates back to pretty puritanical thinking about betting," said Joey Krug, a partner at Founders Fund, regarding the CFTC’s proposal.
He added, "In the short- to mid-term it's good for Polymarket because they are targeting non-U.S. markets. In the long run, it will be good if Americans can participate in this market too."
Polymarket has witnessed over $170 million wagered on events related to the U.S. elections, according to its website. Even former President Donald Trump has cited Polymarket’s odds regarding his potential return to the White House.
Thiel, known for his libertarian views and criticism of regulation, sees the growth of the cryptocurrency market as a challenge to traditional financial systems.
Also Read: Inflation Data Means ‘If You Are Bullish, Buy Bitcoin, Bearish, Short Ethereum’: 10x Research
Why It Matters: This marks Founders Fund’s first investment in a platform that facilitates event-betting contracts, noted Krug.
To improve its standing with regulators, Polymarket appointed former CFTC head J. Christopher Giancarlo as chairman of its advisory board following a regulatory settlement in 2022.
The platform, founded by 25-year-old Shayne Coplan, allows users to trade predictions on diverse topics, including Elon Musk’s social media activity and GameStop Corp.’s stock performance.
Polymarket enables customers to purchase shares using dollar-backed stablecoin (CRYPTO: USDC) without taking custody of customer funds or digital tokens, and it operates by displaying markets on the Ethereum blockchain.
Founders Fund led a $45 million Series B funding round, while General Catalyst had earlier facilitated a $25 million Series A round.
Despite the recent funding, the company’s valuation has decreased compared to prior discussions.
Polymarket was previously aiming for a nearly $1 billion valuation before the CFTC’s actions, according to Bloomberg.
"Ultimately we have the deep conviction that markets on all the things that people are wondering about and have opinions on will exist," Coplan said in an interview.
He acknowledged that immediate returns from the U.S. market are unlikely but remains optimistic about the platform’s long-term potential.
What’s Next: The implications of such investments and regulatory challenges will be a key topic at Benzinga’s Future of Digital Assets event on Nov. 19, where industry experts will discuss the evolving landscape of digital finance and the impact of regulatory actions on innovative platforms like Polymarket.
Read Next: President Biden Cracks Down On Chinese-Backed Crypto Mining Facility Near U.S. Missile Base
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