Better Markets Slams CFTC, Warns Polymarket is Using “FTX Playbook” to Re-Enter US

“Not Coincidental” Timing Raises Red Flags

The letter, addressed to Acting Chair Caroline Pham, outlines a sequence of events that Better Markets calls a “deliberate and coordinated effort to exploit a regulatory gap.” The group points to the highly questionable timing of three key actions in July.

First, the CFTC and the Department of Justice closed their investigations into whether Polymarket had violated a 2022 settlement agreement.

Days later, the CFTC approved the long-dormant application of a little-known Florida firm, QCX LLC. Just after that, Polymarket announced it was acquiring QCX for $112 million, giving it a clear regulatory path to resume U.S. operations.

A Dangerous “FTX Playbook”

Better Markets CEO Dennis Kelleher draws a direct and ominous parallel between Polymarket’s strategy and the one used by Sam Bankman-Fried’s collapsed crypto exchange, FTX.

The letter notes that FTX used the acquisition of already-licensed entities to gain legitimacy and market access while avoiding the rigorous scrutiny required of a new applicant.

“This was, of course, before FTX imploded into bankruptcy and SBF was arrested, convicted, and imprisoned for widespread criminal conduct,” Kelleher wrote.

“Needless to say, the lack of regulatory scrutiny in connection with the acquisition of registered entities can have grave implications.” The letter argues Polymarket’s acquisition of QCX appears to be a clear “regulatory end-run.”

A Vehicle for Illegal Gambling?

The watchdog group also expresses deep concern that Polymarket will use its new regulatory status to offer contracts tied to U.S. political elections and sporting events. Better Markets has consistently argued that such contracts are a form of illegal gambling prohibited by the Commodity Exchange Act.

“Polymarket has previously offered these types of contracts, and there is no indication it intends to refrain from doing so in the future,” the letter states. “The CFTC should not allow CFTC-registered exchanges to serve as platforms for election or sports gambling, and we urge the CFTC to act decisively to prevent it.”

Better Markets is calling for immediate action from the CFTC. The group wants the agency to investigate the circumstances surrounding QCX’s approval and review the Polymarket-QCX transaction to determine if it endangers customers or market stability.

More broadly, the letter urges the CFTC to close what it calls a “critical regulatory gap.” Better Markets argues that any company acquiring a CFTC-registered entity should be required to undergo the same level of scrutiny as the entity did to get licensed in the first place. The group warns that failing to do so “invites the very type of market disruption and regulatory failure that undermines confidence in U.S. financial oversight and, possibly, leads to disasters like FTX.”