In early November, Shayne Coplan had a week he’ll remember for the rest of his life: He got a phone call from the highest levels at Mar-a-Lago. He went on television for the first time. And his New York apartment was raided by the FBI.
The eventful days underscore the precarious position of 26-year-old Coplan and his startup Polymarket, the online classifieds marketplace that became popular in the final months of the presidential campaign, and in the days and hours leading up to election night. , predicted the outcome more accurately than most polls.
in an interview luck Earlier this week, Coplan was excited about what he had achieved and the future of his company. “I’ve learned that anything is possible,” he said. “Making dreams come true has never felt more tangible, and luckily I’m a dreamer. Optimism shapes and changes the world.”
On Wednesday, however, Coplan’s tone changed. After the FBI apprehend He took his phone and laptop X and defiantly he tweeted that the raid was baseless and driven by vengeful political forces upset by the election results.
The legal situation is still developing. The FBI declined to comment; Coplan and his lawyers have said the founder has done nothing wrong, and neither side has specifically said why Coplan could be investigated, although it’s worth noting that Polymarket is under federal jurisdiction. consent decree Not offering certain forward contracts to US citizens.
Polymarket declined to comment for this story, noting that Coplan has also appeared at recent Democratic events, along with vice presidential candidate Tim Walz. (Coplan has also tweeted that he’s nonpartisan.)
But how the investigation plays out could determine whether Polymarket cements its place as a major new force in US politics, or whether Coplan and his company have gotten too close to the sun, opening the door for a competitor to take their place.
A political giant and VC darling
On election night, Donald Trump’s campaign team grew more and more excited as Polymarket charts – reflecting the betting activity of tens of thousands of punters around the world – showed that the spread between their candidate and Kamala Harris was widening. As the first results spread, that spread became a chasm. The next day, Trump’s golf buddy Zach Witkoff congratulate In Coplan X, saying that everyone at Mar-a-Lago—including the president-elect—used Polymarket to measure the election; One of the most senior figures in Trump’s orbit also phoned Coplan to congratulate him.
Polymarket exploded this year, but the idea behind it is centuries old and reflects a well-known idea in the book. The wisdom of the crowdcrowdsourcing a question can produce very accurate results. In practice, Polymarket users can visit the site and bet on the outcome of various events. On November 14, for example, bettors can bet 70 cents the announcement The price of Bitcoin is expected to reach $100,000 this year; if correct, that 70 cent bet would win a dollar. In theory, the larger the crowd, the more accurate the prediction.
Over the weeks, Polymarket took on an oracle-like status both in Trump’s world and among a growing section of the political class. The site had already shown significant visibility in predicting Trump’s selection of JD Vance as his running mate and Joe Biden dropping out. In fact, Polymarket’s ranks grew to such an extent that the country’s most famous pollster, Nate Silver, decided to join the company in July. In the final three months of the campaign, the traditional polls shifted dramatically, usually showing either Trump or Harris nearly tied or leading within a margin of error. But Polymarket consistently showed With Trump odds A gain of 60% or more led some pundits to lionize the site and its founder when the former president won.
Election-related prediction markets have been banned in the US by the Commodity and Futures Trading Commission. The legality of the CFTC ban, however, has been questioned in recent years; A federal district court recently ruled that the ban did not apply KalshiCompetitor Polymarket and other classifieds sites have since ventured to market their services more aggressively.
Coplan is very much a face in the emerging industry. He He grew up in New York Citythe child of academic parents, she sports a distinctive basket of bouncy curls that help give her the affect of an alt-rock bandmate. A self-described “nerdy guy,” Coplan has been deeply interested in probability since high school, leading him to launch Polymarket at age 21. The site stands out in part because it relies on the blockchain to track bets, with users using the USDC stablecoin. to pay or withdraw money.
Although Polymarket didn’t become a household name until years ago, the company’s investors include crypto luminaries such as Ethereum founder Vitalik Buterin and former Coinbase Directed by Balaji Srinivasan. The startup is also backed by venture capital firms like DragonFly and Peter Thiel’s Founder’s Fund.
To date, Polymarket has raised $74 million and has around 30 employees. While VCs like to claim they don’t have favorites among their portfolio companies, the host of a VC dinner in Manhattan this summer astutely identified “the guy from Polymarket.” luck as the most important participant.
Accurate but controversial predictions
As Polymarket became an element of election coverage, it also came under scrutiny. Skeptics pointed out that US citizens were banned from using the platform, meaning the forecast data came from foreigners, not Americans. Others wondered if his predictions could be wrong because of the site’s popularity among crypto users, who mostly lean politically correct.
There was also the issue of net trading – a term that describes a person taking both sides of a trade, often with the intention of artificially inflating liquidity or trying to play the outcome. Before the election, Polymarket’s competitors approached numerous journalists with data to show that the site’s trading data was unreliable. luck completed his researchcontacting two independent forensic firms, they analyzed blockchain data and found that about 30% of Polymarket’s trades were in the clearing trade. In his interview luck this week, Coplan dismissed Fortune’s findings and other stories about unusual data patterns as misinformed “routine pieces.”
In any case, the effects of clearing trade on Polymarket are unclear. Despite the fear of some that bookies could manipulate the betting markets to sway the election, there is no evidence that this happened. According to Matthew Beville, a securities attorney at WilmerHale who published a recent article on prediction markets, Polymarket’s clearing trade (not the client) may have a more trivial explanation: the trade may reflect users looking to increase activity. A cryptographic term describing a project that issues a tradable token to loyal users with the intention of receiving an “airdrop” on the platform. The company declined to comment on whether those tokens are part of its plans.
Coplan may feel vindicated about Polymarket’s performance after the election results, but there are still doubts about the site and its business model. For starters, trading activity on the site has dropped significantly since the presidential election, meaning it can be difficult to develop a regular business outside of major political events. Meanwhile, the popular trading platform Robinhood attracted millions of bets on it just launched prediction platform—suggests that Polymarket may face a lot more competition in upcoming election cycles.
Then there is the matter of income. Unlike Kalshi and others, Polymarket does not charge commission. So far, the company has been candid about how it will pay for its ongoing operations. One option might be to charge companies or political candidates to place custom bets on the website to help them evaluate future events. Another would be to issue its own crypto token, a suddenly more viable option in light of recent Republican sweeps of the White House and Congress, which have been far more crypto-resistant than Democrats.
The FBI is likely to wait until the election is over
For now, though, there’s the question of the FBI’s investigation and what it might portend for the future for both Coplan and Polymarket.
“New phone. Who is it?” Coplan wrote in X on Wednesday afternoon, following a second post that the FBI raid on his apartment was a “last-ditch effort” by the Biden administration to go after those associated with Trump. Coplan’s tweets came soon after New York Post break first the news in a sympathetic account of the raid.
The warrant on which the FBI’s search was based is not yet public, and no charges have been filed. Therefore, it is not possible to know the specific allegations against Coplan and Polymarket. A well-placed crypto attorney who spoke with him luck on the condition of anonymity to preserve his professional relationships, put the incident in context.
According to the lawyer, industry lawyers have been hoping for months that the federations will take action in response to Polymarket’s strict measures. The attorney said all charges would be related to allowing Americans to trade on the platform, which would violate the 2021 consent decree with the CFTC. The decree makes Polymarket a regulated entity under laws that oblige contract markets to collect data on customers and report suspicious activity. In recent months, the company seems to have gone beyond its duties by displaying its logo at events in the US recruitment American social media influencers to promote the website.
The crypto lawyer compared Coplan’s social media behavior to that of FTX founder Sam Bankman-Fried before the SBF indictment, which was defiant but also stupid. In fact, the attorney believes the FBI likely chose to wait until after the election to make the seizures. avoid appearing political
Coplan and Polymarket’s defiant response so far may reflect, appropriately enough, a bet that regulators will quit in reaction to Polymarket’s reputation with the incoming administration.
Coplan’s tweet characterizing the FBI raid as a retaliatory move by the Biden administration has already drawn support from powerful figures in the Trump world, including Elon Musk, who responded with “Indeed.” Coplan responded to Musk in turn by posting an icon of an eagle.
