Polymarket Faced $10 Million Fraud Attempt as CEO Prioritized Growth, Report Says

Prediction market platform Polymarket faced an attempted theft of at least $10 million earlier this year, with fraudsters using stolen debit cards to make bets and attempt withdrawals through the company’s US platform, according to a Wall Street Journal investigation. At one point, the company’s payment processor rejected more than 80% of incoming deposits as fraudulent, far above typical industry fraud rates.

According to the report, Polymarket’s compliance team was reportedly surprised when the company’s CEO instructed staff to prioritize growth and address potential regulatory penalties later. Most attempted deposits ultimately failed, with a small number of users responsible for the bulk of the fraudulent activity.

Safety Rule Rollback Raised Internal Concerns

As fraudulent deposits overwhelmed compliance staff alongside a backlog of legitimate withdrawal requests, company leadership reportedly removed a safeguard requiring funds to be withdrawn to the same payment source they came from, a common anti-money-laundering practice at financial institutions. Some employees warned this change could increase vulnerability to further attacks, though executives maintained existing protections were sufficient.

Leadership Turnover Followed Internal Warnings

The incident coincided with significant leadership changes at the company, including the resignation of its chief compliance officer after submitting a detailed report on fraud concerns, followed by the departure of its US CEO and other regulatory staff. An independent investigation later concluded the company had complied with applicable regulations.

Separate Security Breach Exposed Hundreds of Accounts

In a separate incident in July, nearly 500 users had their accounts compromised through an apparent registration vulnerability, allowing attackers using stolen personal information to access accounts without needing existing login credentials. The company said it would cover affected users’ financial losses.

Scrutiny Continues Amid Major Fundraising Effort

These developments come as regulators reportedly investigate the platform, and as the company pursues roughly $1 billion in new funding at a valuation near $21 billion, with new leadership hires and expanded compliance measures introduced since the incidents occurred.