Two plaintiffs have filed a complaint against Polymarket alleging breach of contract and deceptive practices in the resolution of a prediction market tied to whether Strategy would sell bitcoin by May.
The lawsuit, filed by William Wood and Thomas Bush in the New York Supreme Court on July 3, names Polymarket, CEO Shayne Coplan, CMO Matthew Modabber, and other related entities and individuals as the defendants.
According to the filing, the plaintiffs held "Yes" shares in a binary market asking whether Strategy would sell any of its bitcoin holdings by May 31. Strategy disclosed in a Form 8-K filing with the U.S. Securities and Exchange Commission that it had sold 32 BTC between May 26 and 31.
Per the complaint, Polymarket ultimately resolved the market as "No" after adding clarifying language that plaintiffs allege effectively required public confirmation by the May 31 deadline rather than merely a sale by that date. On June 3, the prediction market's final review concluded in a "No" after a UMA vote, which is used to resolve disputed markets on Polymarket.
Breach of contract
Plaintiffs claim Polymarket altered the market’s terms post-resolution, violating the platform’s core promise of rules-based, objective outcomes. They also argue that Strategy's 8-K filing constituted clear proof under the market’s stated rules, which designated information from Strategy as the primary resolution source.
"If defendants can impose a confirmation-by-deadline requirement after the fact in a market this objective, then the advertised promise of pre-defined, rules-based resolution is materially misleading," the filing said. "A prediction market that will not honor a proven, unambiguous event does not seek truth; it controls payout."
Plaintiffs assert claims including breach of contract, breach of the implied covenant of good faith and fair dealing, money had and received, unjust enrichment, and violations of New York General Business Law regarding deceptive acts and false advertising. They seek damages to be determined at trial, including the $1.00-per-share redemption value of their winning "Yes" shares, as well as legal fees and costs.
No response from Polymarket has been detailed in the initial court filing. The Block has reached out to Polymarket for comment.
Meanwhile, the prediction market platform hit its all-time high record for monthly trading volume in June, with its main platform attracting $10.7 billion, while its U.S. platform reported $3.25 billion, according to The Block's data dashboard.
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