Key Points
- Criminal actors attempted to extract at least $10 million from Polymarket US through stolen debit card schemes in February.
- Payment processor Checkout.com flagged over 80% of transaction deposits as fraudulent during the peak of the attack.
- According to the Wall Street Journal, CEO Shayne Coplan instructed employees to prioritize platform expansion despite mounting compliance issues.
- The platform implemented enhanced fraud prevention measures and reduced fraud rates to normal industry levels by May.
- Polymarket is currently pursuing approximately $1 billion in fresh capital at a $21 billion valuation while considering a potential public offering.
A prediction market platform faced a significant criminal operation targeting at least $10 million through stolen payment cards on its U.S. operation during the early months of this year, a Wall Street Journal investigation has revealed.
The fraudulent operation launched in February, coinciding with Polymarket US expanding access to additional users.
Criminal operators allegedly connected stolen debit cards to platform accounts, executed bets, and attempted to transfer funds to external cards or accounts under their control.
During the height of the attack, Checkout.com, the platform’s payment processing partner, identified more than 80% of incoming deposits as fraudulentādramatically exceeding the typical industry benchmark of approximately 1%, the investigation found.
Inside the $10 Million Fraud Operation
The majority of fraudulent deposit attempts were blocked.
Sources with knowledge of the incident indicated that roughly seven individual users drove most of the illicit activity, with a single account attempting approximately 4,000 separate deposits.
The exact amount successfully stolen from the attempted $10 million remains unclear from the Journal’s reporting.
Staff members escalated worries about the security breach to CEO Shayne Coplan.
According to sources briefed on internal communications, Coplan directed the team to maintain their growth trajectory and address potential regulatory challenges as they arose. The company has publicly stated its dedication to market integrity and collaboration with authorities and enforcement agencies.
The security incident also caused withdrawal processing delays as compliance teams managed the surge of flagged transactions.
Company leadership subsequently eliminated a protective measure that required funds deposited via one payment method to exit through the identical source.
Internal staff cautioned that removing this safeguard might elevate money-laundering vulnerabilities, the investigation noted.
Enhanced Security Measures Implemented
The platform subsequently deployed more robust security protocols.
By May, fraudulent transaction rates had normalized to industry standards, according to sources with operational knowledge.
New protections included restrictions on the number of debit cards linkable to individual accounts and partnership with fraud-detection specialist Riskified.
Multiple executive-level departures occurred during this timeframe.
Andrew Clifford, Chief Compliance Officer for Polymarket US, stepped down in April following submission of documentation detailing fraud-related concerns.
The organization subsequently terminated U.S. CEO Justin Hertzberg, while additional executives overseeing regulatory compliance and anti-money-laundering operations also exited.
An examination conducted by Sullivan & Cromwell law firm determined that the platform had maintained regulatory compliance, according to informed sources.
A separate security vulnerability emerged in July, reportedly impacting nearly 500 users through an account registration weakness.
Threat actors leveraging stolen personal data could allegedly compromise existing accounts and associated payment instruments without possessing login credentials or passwords. The platform committed to reimbursing affected users.
Major Funding Round and IPO Plans Advance
These security challenges surface as the company pursues approximately $1 billion in new investment at roughly $21 billion valuation.
1789 Capital is contributing around $300 million to this financing round, adding to its previous $200 million investment, according to the Journal and The Block.
Coplan has additionally outlined preliminary plans for a potential 2027 initial public offering and recruited former Amazon chief financial officer Warren Jenson as the company’s inaugural CFO.
The platform states it has reinforced risk oversight, compliance frameworks, product validation processes, and executive leadership as it scales operations.
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