Polymarket Faced $10 Million Fraud Scheme, WSJ Report Finds

Polymarket, the prediction-market platform racing toward a $21 billion valuation, faced an attempted fraud scheme using stolen debit cards worth at least $10 million, according to a Wall Street Journal investigation published Saturday. The report also says CEO Shayne Coplan told staff to prioritize growth over compliance concerns as the company opened its U.S.-facing platform to waitlisted users earlier this year.

The timing matters. Polymarket is currently seeking $1 billion in new financing at that roughly $21 billion valuation, with $300 million reportedly coming from 1789 Capital, the firm run by Donald Trump Jr., who also sits on Polymarket’s advisory board. That fresh capital would follow an earlier $200 million investment from the same firm. The company has also brought on Warren Jenson, who spent about two and a half years as Amazon’s CFO starting in September 1999, as it builds out its executive bench ahead of a possible 2027 IPO.

How the fraud attempt unfolded

According to the facts laid out in the WSJ investigation, the fraud attempts began in February 2026, shortly after Polymarket started admitting U.S. users off its waitlist. Payment processor Checkout.com flagged more than 80% of Polymarket’s U.S. deposits as fraudulent at the scheme’s peak — a staggering figure against an industry-standard fraud rate of roughly 1%. Visa reportedly told Checkout.com in June to curb the fraudulent payments flowing through Polymarket.

Roughly seven users were responsible for the bulk of the attack, with a single user reportedly attempting close to 4,000 separate deposits. Polymarket eventually brought fraud rates back toward normal levels by May after limiting the number of debit cards that could be linked to a single account.

Separately, in late July 2026, a registration flaw exploiting stolen personal data allowed roughly 500 user accounts to be compromised — a distinct incident from the debit-card scheme but one that adds to the picture of strained controls during a period of rapid user growth.

Compliance turnover and a growth-first posture

The fraud episode did not occur in isolation. Compliance officer Andrew Clifford resigned in April after flagging fraud issues internally, and U.S. CEO Justin Hertzberg was subsequently fired, along with the heads of U.S. regulation and anti-money-laundering. Polymarket commissioned a probe by law firm Sullivan & Cromwell, which concluded the company complied with regulations — a finding that sits somewhat uneasily alongside the scale of fraud described in the WSJ report and the leadership departures that preceded it.

Coplan’s alleged instruction to staff to prioritize growth over compliance concerns, if accurate, would help explain why fraud controls lagged so far behind the pace of user onboarding. Opening a U.S.-facing platform to a large waitlisted user base is inherently a moment of elevated risk, and payment processors typically expect issuers to tighten screening precisely when volumes surge. Instead, the reported internal posture appears to have leaned the other way until Visa’s intervention forced a correction.

What it means for Polymarket’s regulatory standing

This is not Polymarket’s only brush with regulators. The Commodity Futures Trading Commission is already investigating the platform following an earlier WSJ report about paid staged bets on replica sites, a story that prompted bipartisan calls in the Senate for a CFTC probe. A fraud episode of this magnitude, surfacing while that investigation is active, adds another data point for regulators assessing whether Polymarket’s internal controls match the scale of the business it is trying to become.

The stakes are heightened by the broader regulatory environment prediction markets and crypto-adjacent platforms now operate in. With the Senate having blocked the CLARITY Act, the SEC and CFTC have been left to improvise a crypto rulebook piece by piece, and agencies are only now opening limited pathways for crypto firms to operate within defined boundaries. In that vacuum, high-profile compliance failures at a platform seeking a $21 billion valuation could shape how aggressively regulators move — and how skeptically Congress views self-policing claims from prediction-market operators generally, a dynamic also visible in rival Kalshi’s own product expansion into new derivatives markets.

What comes next

Several threads are worth watching in the coming months:

• Whether the CFTC’s existing investigation expands to formally examine the fraud and account-compromise incidents described in the WSJ report.
• How the $1 billion financing round and $21 billion valuation target are affected by renewed scrutiny of Polymarket’s compliance history.
• Whether Warren Jenson’s arrival as CFO signals a broader executive reset following the departures of Hertzberg and Clifford.
• Any further disclosures about the roughly 500 accounts compromised in the July registration exploit, including whether affected users face financial harm.

For now, Polymarket’s growth trajectory and its compliance track record are pulling in different directions, and how the company reconciles them will likely shape both its IPO prospects and its standing with regulators already watching it closely.

Source: The Block

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