In early November, Shane Coplan had a week he would remember for the rest of his life: He received a phone call from the highest levels at Mar-a-Lago. He appeared on television for the first time. The FBI raided his apartment in New York City.
An eventful few days highlight the precarious position of both the 26-year-old Coplan and his startup Polymarket, the online prediction market that became a household name during the final few months of the presidential campaign — and in the days and hours leading up to Election Night. Predict the outcome more accurately than most polls.
In an interview with luck Earlier this week, Coplan expressed his happiness with what he has achieved and the future of his company. “I’ve learned that anything is possible,” he said. “Transforming dreams into reality has never been more tangible, and fortunately I am a dreamer. The world is shaped and changed by optimists.”
But on Wednesday, Coplan’s tone changed. After the FBI seized his phone and laptop, he headed to X and defiantly chirp The raid is baseless and is being driven by vindictive political forces disturbed by the election result.
The legal situation is still evolving. The FBI declined to comment. Coplan and his lawyers have maintained that the founder did nothing wrong, and neither party has explicitly stated why Coplan might be under investigation — though it’s worth noting that Polymarket is subject to federal law. Consent decree Not offering certain forecast contracts to US citizens.
Polymarket declined to comment for this story, noting only that Coplan also appeared at recent Democratic events, including one with vice presidential candidate Tim Walz. (Coplan has also tweeted that he is nonpartisan.)
But how the investigation develops may determine whether Polymarket will cement its place as an important new force in American politics — or whether Coplan and his company have flown too close to the sun, opening the door for a competitor to take their place.
Political giant and VC darling
On election night, Donald Trump’s campaign team became increasingly jubilant as Polymarket charts – reflecting the betting activity of tens of thousands of bettors around the world – showed the gap between their candidate and Kamala Harris growing wider. As early results emerge, this spread has become a chasm. The next day, Trump’s golf buddy Zach Witkoff here Coplan on X, saying everyone at Mar-a-Lago — including the president-elect — was using Polymarket to measure the election; A senior figure in Trump’s orbit also phoned Coplan to congratulate him.
Polymarket came onto the scene this year, but the idea behind it is centuries old and reflects a popular idea in the book The wisdom of crowdsthat outsourcing a question can produce very accurate results. In practice, Polymarket users can visit the site and bet on the outcomes of various events. On November 14, for example, bettors can bet 70 cents on prediction And that the price of Bitcoin will reach $100,000 this year; If this bet is correct, the 70 cent bet will win $1. In theory, the larger the crowd, the more accurate the prediction.
For weeks, Polymarket has taken on a sort of prophetic status in Trumpworld and among a growing segment of the political class. The site has already shown remarkable foresight in predicting Trump’s selection of J.D. Vance as his running mate and Joe Biden’s withdrawal from office. In fact, PolyMarket’s profile has grown to the point that the country’s most famous pollster, Nate Silver, decided in July to join the company. Over the last three months of the campaign, traditional polls swung wildly, typically showing Trump or Harris either effectively tied or leading within the margin of error. But Polymarket has consistently shown Trump’s odds of winning at 60% or higher, leading some critics to celebrate the site and its founder when the former president wins.
Election-related prediction markets have been banned for decades in the United States by the Commodity and Futures Trading Commission. However, the legality of the CFTC ban has come into question in recent years; A federal district court recently ruled that the ban did not apply to Calci, a competitor to Polymarket, and other prediction sites have since been encouraged to promote their services more aggressively.
Coplan is very much the face of the emerging industry. He grew up in New York City, the child of academic parents, and has a distinctive basket of springy curls that help give him the effect of an alternative rock band member. A self-proclaimed “nerd guy,” Coplan was keenly interested in possibilities in high school, which led him to create Polymarket at the age of 21. The site stands out in part because it relies on blockchain to track bets, with users using the stablecoin USDC. To pay or exchange money.
While Polymarket did not become a household name until this year, the company’s investors include prominent figures in the cryptocurrency space such as Ethereum founder Vitalik Buterin and former Coinbase CTO Balaji Srinivasan. The startup is also backed by venture capital firms such as DragonFly and founder Peter Thiel’s fund.
To date, Polymarket has raised $74 million and has a staff of about 30. And while VCs like to claim they have no favorites among their portfolio companies, the organizer of a venture capital dinner in Manhattan this summer secretly identified “the Polymarket guy.” To do so. luck As the most important attendees.
Accurate but controversial predictions
As Polymarket has become a staple of election coverage, it has also come under scrutiny. Skeptics pointed out that US citizens were banned from using the platform, meaning the prediction data came from foreigners, not Americans. Others wondered whether his predictions might have been skewed by the site’s popularity among cryptocurrency users, who often lean to the right politically.
There was also the issue of ghost trading – a term that describes one person taking both sides of a trade, often in the hope of artificially inflating liquidity or trying to manipulate the outcome. Before the election, Polymarket’s competitors contacted several reporters with statements that purported to show that the site’s trading data was not reliable. luck She conducted her own investigations, and contacted two independent forensic companies, which analyzed blockchain data and found that about 30% of Polymarket trades consisted of wash trading. In his interview with luck This week, Coplan criticized Fortune’s findings and other stories about unusual data patterns as ill-considered “hit pieces.”
However, the implications of wash trading on Polymarket are unclear. Although some fear that bettors may manipulate betting markets to influence the election, there is no evidence of this happening. According to Matthew Bevel, a securities attorney at WilmerHale who co-published a recent article on prediction markets, wash trading on PolyMarket (which is not a client) may have a more trivial explanation: the trades could reflect users seeking increased activity. on the platform in hopes of getting an “airdrop” — a cryptocurrency term that describes a project that issues a tradable token to loyal users. The company declined to comment on whether these tokens are part of its plans.
It’s possible that Coplan feels rightly vindicated over Polymarket’s performance in the wake of the election results, but questions remain about the site and its business model. For starters, trading activity on the site has declined sharply since the presidential election, meaning it can be difficult to develop regular business outside of major political events. Meanwhile, popular trading platform Robinhood has attracted millions of bets on its newly launched prediction platform – suggesting that Polymarket may face much greater competition in the upcoming election cycles.
Then there is the issue of revenue. Unlike Kalci and others, Polymarket does not charge any commissions. Until now, the company has been coy about how it will pay for its continued operations. One option could be to charge companies or political candidates to make custom bets on the site to help them evaluate future events. Another solution is to issue its own cryptocurrency — a prospect that suddenly seems more viable in light of the recent sweep of the White House and Congress by Republicans, who have been friendlier to cryptocurrencies than Democrats.
The FBI likely waited until after the election
However, for now, there is the matter of the FBI investigation and what it could indicate for the future for both Coplan and Bullemarket.
“New phone. Who’s dis?” Coplan wrote on X on Wednesday afternoon, following up with a second post that claimed the FBI raid of his apartment was a “last-ditch effort” by the Biden administration to go after people associated with Trump. Coplan’s tweets came shortly after New York Post Break first news Of raid in sympathetic account.
The arrest warrant on which the FBI search was supposed to be based is not yet public, and no indictment has been filed. As such, it is not possible to know the exact allegations against Coplan and Polymarket. One well-regarded cryptocurrency lawyer I spoke with luck On the condition that his identity not be revealed in order to preserve his professional relationships, and that the incident be placed in context.
According to the lawyer, industry lawyers had been anticipating the feds would take action for months in response to what appeared to be reckless compliance actions by Polymarket. The lawyer said any charges would likely be related to allowing Americans to trade on the platform, which would have violated a 2021 consent decree with the Commodity Futures Trading Commission (CFTC). This decree treats Polymarket as a regulated entity, subject to laws requiring contract markets to collect data on their customers and report suspicious activities. In recent months, the company appears to have violated its obligations by displaying its logo at events taking place in the United States and hiring American social media influencers to promote the site.
Cryptocurrency lawyers compared Coplan’s behavior on social media to that of FTX founder, Sam Bankman Fried, before indicting SBF, which is defiant but also foolish. In fact, the attorney believes the FBI likely chose to wait until after the election to make the seizures to do so Avoids Political visibility.
The defiant response so far by Coplan and Polymarket may reflect – appropriately enough – a bet that regulators will step down in reaction to Polymarket’s popularity with the incoming administration.
Coplan’s tweet describing the FBI raid as a retaliatory move by the Biden administration has already received support from powerful figures in Trump World, including Elon Musk, who responded with, “Indeed.” Coplan responded to Musk in turn, simply posting an eagle icon.
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