South Korean police have referred 18 Polymarket users to prosecutors as part of a months-long investigation into wagers on the prediction market. Authorities say 26 users placed a combined 17.6 billion won (~$12.7M), including one account that wagered about 5.7 billion won (~$3.8M). Investigators used OSINT on public blockchain records to identify wallet holders and say the trades meet the legal definition of gambling under Article 246. Defendants argue the activity more closely resembles derivatives trading, a distinction likely to shape any court rulings.
South Korea Refers 18 Polymarket Users to Prosecutors After $12.7M in Wagers
1789 Capital Polymarket valuation deal illustration. Photo by BeInCrypto
South Korean police have referred 18 users of the prediction market Polymarket to prosecutors on allegations of illegal gambling, escalating a months-long probe into bets placed on the platform’s election and other markets.
Figures Released: Lawmaker Yoon Kun-young’s office disclosed the referral figures after receiving data from the National Police Agency. Gangwon Provincial Police Agency’s Cyber Investigation Unit has formally investigated 26 users as of Sept. 15. Those accounts placed a combined 17.6 billion won (roughly $12.7 million) on Polymarket’s political, economic and social contracts; one account alone wagered about 5.7 billion won (about $3.8 million).
How Investigators Identified Bettors: Authorities say they traced on-chain transactions using open-source intelligence (OSINT) techniques applied to public blockchain records. Despite Polymarket’s anonymous design, investigators say the tracing allowed them to link transfers back to individual wallet holders.
Legal Argument From Authorities: Prosecutors assert the transactions meet the legal definition of gambling under Article 246 of South Korea’s Criminal Act, citing Supreme Court precedent that wagering property on an uncertain outcome constitutes gambling regardless of any claimed skill element.
Defendants’ Defense: The users under investigation argue their activity resembles derivatives trading rather than betting. They note structural features of Polymarket contracts—such as trading on an order book and the ability to close positions before expiry—that differ from conventional fixed-odds wagers. Attorney Kim Tae-rim of AXIS Law said that distinction could be central if the issue reaches the courts.
Regulatory Context: This criminal referral follows a separate regulatory measure in August, when South Korea’s broadcasting and communications regulator ordered internet service providers to block domestic access to Polymarket, citing the platform’s winner-take-all payout structure. Polymarket argued it should be beyond Korean jurisdiction because it lacks a Korean-language interface and pays out in cryptocurrency rather than Korean won; the regulator rejected that defense.
Broader Implications: Polymarket already faces scrutiny from regulators in multiple jurisdictions over trader verification and monitoring. How South Korean prosecutors and, ultimately, courts classify Polymarket’s contracts—gambling or financial derivatives—could set an influential precedent for other countries grappling with prediction markets that operate on public blockchains.
Next Steps: The referred cases will now be handled by prosecutors, and any criminal charges or court decisions could take months. Observers will be watching whether courts emphasize statutory definitions of gambling or the contractual and market features that resemble financial trading.
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