DOJ and CFTC Drop Investigations Into Polymarket

This now forms part of the shift in crypto enforcement under the Trump administration. Meanwhile, South Korea’s courts acquitted former Wemade CEO Jang Hyun-guk of market manipulation charges tied to the WEMIX token, though the case is still controversial due to past hacks and delistings. In the US, Tornado Cash co-founder Roman Storm is now standing trial over allegations that his crypto mixer allowed North Korean hackers to launder funds. This could become a landmark case for developer liability in decentralized finance. US Ends Polymarket Probe US authorities reportedly closed their investigations into Polymarket, the decentralized online prediction market that came under scrutiny for potentially allowing US-based users to place bets on political outcomes. According to a Bloomberg report on Tuesday, the Department of Justice and the Commodity Futures Trading Commission (CFTC) decided to end their probes, which intensified after the 2024 US elections. At the time, many users on the platform were reportedly betting on election results, which very quickly attracted the attention of regulators. Polymarket previously settled with the CFTC in 2022 for $1.4 million over similar concerns. As part of the investigations, the FBI raided the home of Polymarket CEO Shayne Coplan in November of 2024, and seized electronic devices as part of its inquiry. While Coplan and Polymarket have not commented on the Bloomberg report, a source familiar with the matter confirmed that the investigations have concluded. The timing of the closure is interesting as it happened during a shift in US enforcement policy toward digital assets under the Trump administration. While the initial investigations were conducted during Joe Biden’s presidency, President Donald Trump’s administration has taken a different approach. Under Trump, several enforcement actions against crypto firms have been dropped, particularly those involving executives who supported his 2024 campaign. Brian Quintenz, Trump’s nominee for CFTC Chair, even declined to confirm whether he will ensure the agency remained bipartisan during his Senate confirmation hearing in June. Meanwhile, the US House of Representatives is preparing to vote on three major crypto-related bills before its August recess. Trump has been particularly focused on fast-tracking the GENIUS Act, which is a bill intended to regulate payment stablecoins. The outcome of these legislative efforts could greatly change the US regulatory landscape for crypto, particularly in light of the recent shift away from aggressive enforcement. South Korea Clears Former Wemade CEO Meanwhile, a South Korean court acquitted Jang Hyun-guk , the former CEO of blockchain gaming firm Wemade, of charges related to manipulating the circulation of the WEMIX cryptocurrency. The Seoul Southern District Court ruled that Jang did not intentionally try to influence crypto market prices through deceptive practices, and cleared him of violating the country’s capital market laws. This is a huge legal victory for Jang, who now works at the blockchain gaming firm Nexus. Jang Hyun-guk The case stemmed from allegations that Jang falsely announced a halt in WEMIX token liquidation in order to stabilize the token’s price and boost investor confidence. Prosecutors claimed that Jang misrepresented and withheld details about the token’s true circulating supply and continued to sell tokens despite previously stating sales would stop in February of 2022. Between February and October of that year, Wemade allegedly sold over $200 million worth of WEMIX without proper disclosures, and used the proceeds to invest in external funds and secure stablecoin loans backed by the token. WEMIX price action over the past year (Source: CoinMarketCap ) The controversy certainly took a toll on the WEMIX token , which fell 97% from its all-time high to just $0.61. At press time, the crypto was trading hands at $0.69. In December of 2023, the Digital Asset eXchange Alliance, a consortium of South Korea’s leading exchanges, delisted the token with court approval due to transparency concerns. Although Jang has now been cleared of criminal intent, prosecutors may still appeal the court’s decision. The WEMIX ecosystem has also been rocked by a separate controversy surrounding a major hack. On Feb. 28, over 8.6 million WEMIX tokens were stolen from the Play Bridge Vault, which resulted in more than $6 million in losses. The Wemix Foundation was accused of attempting to cover up the incident after delaying its public disclosure. CEO Kim Seok-hwan denied these claims by saying the delay was to prevent market panic. Nevertheless, the token’s price dropped almost 40% in the days after the attack. Roman Storm Trial Begins Another high profile case is turning heads in the crypto space. Jury selection concluded in the criminal trial of Tornado Cash co-founder Roman Storm. This case could set a major precedent for the crypto and blockchain development community. Proceedings began in the US District Court for the Southern District of New York. Prosecutors are seeking to prove that Storm knowingly made it possible for North Korean hackers to launder illicit funds through the privacy-focused crypto mixer Tornado Cash, thereby violating US sanctions. In opening arguments, prosecutors centered their case on the connection between Storm and the Lazarus Group, which is a North Korean-backed hacking organization accused of stealing approximately $600 million in cryptocurrency during the 2022 Ronin Bridge exploit. Assistant US Attorney Kevin Mosley described Tornado Cash as a ”giant washing machine for dirty money” and claimed that Storm knowingly allowed the laundering to continue even after learning of the protocol’s misuse. Storm’s defense pushed back by arguing that Tornado Cash is a neutral and open-source privacy tool with legitimate applications, and that the developer cannot be held criminally liable for how others choose to use the technology. His lawyer, Keri Axel, stated that Storm had no involvement in the hacks and could not control how users interacted with decentralized smart contracts. The trial has attracted a lot of attention from across the crypto industry due to its implications for developers building privacy-focused tools/ It is expected to continue over the next several weeks .

Source: Coinpaper