In the early morning hours of November 13, 2024, federal agents wielding a battering ram broke through the door of Shayne Coplan’s Manhattan penthouse. The 27-year-old founder of Polymarket, still in his bedroom, watched as FBI agents seized his phone and electronic devices. Federal prosecutors suspected his cryptocurrency-based prediction platform—where users wager on everything from presidential elections to celebrity gossip—was violating anti-money-laundering laws designed to prevent illicit financial activity.

Fourteen months later, the shaggy-haired entrepreneur’s fortunes have reversed spectacularly. According to The Wall Street Journal, the Justice Department has dropped its investigation. The New York Stock Exchange’s parent company struck an investment deal valuing Polymarket at $9 billion, instantly making Coplan a billionaire. Donald Trump Jr., whose venture-capital firm 1789 Capital invested millions in the company, joined as an adviser. Most significantly, Polymarket—banned from serving U.S. customers since a 2022 regulatory settlement—received clearance to launch a betting app for American users.

The dramatic turnaround represents more than one founder’s personal vindication. Polymarket’s ascent coincides with the explosive growth of wagering across sports, cryptocurrency, elections, and virtually every other domain of human activity. Traditional boundaries separating investing, crypto trading, and gambling are dissolving rapidly. What Coplan calls his “global truth machine” has embedded itself into mainstream discourse: analysts cite Polymarket probabilities in research reports, national news outlets reference its predictions, and viewers of the Golden Globes saw betting odds flash across their television screens.

The Wisdom of Crowds Meets Wall Street

Major institutions have embraced Polymarket’s data. Google, X (formerly Twitter), the National Hockey League, and Dow Jones—publisher of The Wall Street Journal—have all struck data partnerships with the platform. The company’s predictions, derived from real-money betting action, now appear everywhere from financial terminals to social media feeds. Vitalik Buterin, the prominent Ethereum founder and Polymarket backer, articulated the platform’s appeal in a December online post: “With prediction markets, if you make a dumb bet, you lose.”

The underlying theory is straightforward: people who risk their own money are more likely to make accurate predictions than pundits, pollsters, or self-proclaimed experts with no skin in the game. Unlike traditional bookmakers who set odds and take bets, Polymarket operates as a market where users trade contracts that pay $1 if a prediction proves correct and zero if not. As traders buy and sell based on their assessment of probabilities, contract prices fluctuate—a 41-cent price implies a 41% chance of occurrence. The model promises to harness collective intelligence at scale.

A Business Model Built on Air

Despite its eye-popping valuation, Polymarket generates almost no revenue. The company could charge fees on trades but has kept them at zero on nearly all markets to attract users. This approach mirrors the growth-at-all-costs strategy that defined the previous decade’s tech startups, raising questions about when—or whether—the platform will achieve profitability. Coplan has told investors he envisions Polymarket growing into a $100 billion company with billions of users, with its predictions informing government policy and helping people evaluate online information credibility.

“The vision that I know that my team and I want to build has not come to life fully yet,” Coplan said in an interview with The Wall Street Journal. “We still have a long way to go.” His backers speak enthusiastically about democratizing access to predictive intelligence, arguing that crowd wisdom surpasses expert opinion when financial stakes are involved.

Regulatory Minefields and International Complications

Regulators worldwide have viewed prediction markets with deep suspicion. In some jurisdictions, gambling authorities treat these platforms as unregistered casinos. In the United States, the Commodity Futures Trading Commission (CFTC) classifies prediction market contracts as derivatives under its jurisdiction. Federal courts continue deliberating whether prediction markets can legally offer sports betting—a question with profound implications for the industry’s future.

Polymarket’s path has been particularly rocky. In January 2022, the CFTC deemed the platform an unregistered exchange failing to comply with agency rules, including safeguards against market manipulation. Polymarket agreed to pay a $1.4 million fine and cease serving American customers without admitting wrongdoing. The settlement forced the company offshore, requiring users to attest they weren’t U.S.-based—a restriction that proved largely cosmetic.

It became an open secret that Americans continued using Polymarket despite the ban. By employing virtual private networks (VPNs), U.S. bettors could mask their locations. Because Polymarket accepted cryptocurrency deposits without identity verification, Americans could easily fund accounts. Research by CryptoQuant, a blockchain analytics firm cited by The Wall Street Journal, revealed millions of dollars flowing to Polymarket wallets from Robinhood Markets—a platform with predominantly American customers—after the CFTC settlement. Some users didn’t bother hiding their nationality, openly discussing Polymarket trades on social media.

Suspicious Patterns and Insider Trading Allegations

As Polymarket prepared to launch its regulated U.S. platform, its offshore markets were plagued by suspicious activity. In November, the company angered users with a ruling that Russia had captured the Ukrainian town of Myrnohrad—benefiting those betting on capture by November 15. Russia hadn’t actually taken the town. Polymarket had relied on an online map maintained by the Institute for the Study of War, a Washington think tank. That map briefly showed incorrect information due to what the institute later called an “unauthorized and unapproved edit.” The think tank apologized and fired an employee, but not before bets were settled.

Polymarket users suspected manipulation, pointing to an anonymous trader who turned $62 into more than $6,700 shortly before the market resolved. Asked about the incident, Coplan acknowledged the company needs to “troubleshoot” its bet resolution process as it scales. The episode highlighted fundamental questions about how prediction markets determine truth when real-world facts remain contested or unclear.

More eyebrows rose in early January when a mystery trader earned over $400,000 betting on Venezuelan leader Nicolás Maduro’s downfall, according to The Wall Street Journal. Many bets came just hours before the surprise U.S. military operation removing Maduro from power. The timing prompted more than two dozen House Democrats to support proposed legislation banning government employees from trading on inside knowledge via prediction markets.

The Nobel Prize Mystery and Other Controversies

Months earlier, a trader identified only as “6741” made more than $50,000 betting that Venezuelan opposition leader María Corina Machado would win the Nobel Peace Prize. The bets, placed the night before the announcement, led the Norwegian Nobel Institute to investigate whether it had been targeted by espionage. Some traders speculated the institute accidentally leaked information by posting files about Machado in an obscure corner of its website. Cybersecurity firm Patchstack found that an image of Machado’s face was uploaded approximately one hour and 40 minutes before the public announcement. A Nobel spokeswoman insisted the institute prepares materials about winners “in a secure, isolated offline environment.”

Other wagers have sparked disputes over rightful winners. Last year, users bet on whether Ukrainian President Volodymyr Zelensky—known for military-style clothing—would appear in a suit by July. After he attended a June 24 summit wearing a black, suit-like outfit, a battle erupted over classification. Hundreds of thousands of dollars hung in the balance. The decision favored traders who didn’t view Zelensky’s outfit as a suit.

Angry traders flooded social media, complaining that influential bettors had corrupted the resolution process. Samuel J. Gosling, a software engineer in Ireland who lost about $1,000, told The Wall Street Journal: “A lot of people would assume that it is a suit. If you ask anyone in the Western world, ‘Is this man wearing formal attire?’ they would say yes.”

From Dildos to Dignity: The Platform’s Identity Crisis

Early prediction markets focused on serious topics like economic indicators and elections. Polymarket expanded into a dizzying array of subjects, many frivolous or controversial. In August, after dildos were thrown onto courts during WNBA games, Polymarket listed contracts on when the next incident would occur. Players denounced the bets as crass and disrespectful. Critics noted Polymarket was effectively incentivizing bettors to throw objects at games to win their wagers.

In a recent interview, Coplan called those bets “silly” and said Polymarket no longer lists such contracts. “It’s not what we want to be known for,” he acknowledged. The incident illustrated tensions between maximizing user engagement through sensational content and building a platform serious institutions would trust. As Polymarket courts mainstream adoption and regulatory approval, these trade-offs have become more acute.

The Anonymity Problem and Wash Trading Concerns

Rajiv Sethi, a Barnard College economics professor who studies prediction markets, expressed concern about Polymarket’s anonymity. “What that means is people can do all kinds of things that they would not be able to do on other markets,” he told The Wall Street Journal. That anonymity could allow users to trade on classified information or operate multiple accounts, buying and selling between them to artificially inflate trading volume.

A recent Columbia University study co-authored by Sethi found signs of wash trading—moving assets back and forth to create the illusion of genuine activity—in approximately 25% of Polymarket’s volume. Such transactions can make traders eligible for volume-based rewards and make platforms appear more active than they are. Polymarket’s terms of use prohibit wash trading, but enforcement without identity verification is challenging.

Polymarket has defended its approach, arguing that blockchain technology provides real-time transparency into trading activity. “The moment there’s a suspected insider, it’s pointed out on X, and it’s visible on Polymarket immediately,” Coplan said. “So it’s not like it’s done in darkness.” The company maintains it complies with all applicable laws, though critics question whether transparency alone can substitute for traditional regulatory safeguards.

The Making of a Crypto Entrepreneur

Coplan grew up on Manhattan’s Upper West Side, appearing as “cute kid” in a little-seen 2006 film directed by his film-professor mother. He attended a selective public high school, where he wrote songs and played multiple instruments including guitar, keyboards, and ukulele. After dropping out of New York University, he plunged into the cryptocurrency startup scene.

His first venture, Union Marketplace, failed to gain traction. Pivoting to prediction markets, he launched Polymarket in 2020 with a $4 million seed round from investors including Naval Ravikant, an early Uber Technologies backer. Coplan told some investors Polymarket would become a $100 billion company—a claim many found outlandish. “A lot of people wouldn’t invest because they thought Shayne was nuts,” said Samir Vasavada, an early investor, to The Wall Street Journal. “It was to an extreme the amount he believed in himself.”

Polymarket established offices in Manhattan’s SoHo neighborhood. Coplan struck some colleagues as a demanding boss who often yelled at employees and sometimes participated in video meetings shirtless, according to people familiar with the matter. “Look, I’m super passionate about my work,” Coplan said. “And sometimes things get heated.” His management style reflected the intensity driving his vision, even as it created workplace tensions.

Prediction Markets’ Long Struggle for Legitimacy

Three economists at the University of Iowa developed the first experimental prediction market in the 1980s. For decades, entrepreneurs struggled to commercialize the concept, partly due to CFTC resistance. The agency blocked contracts tied to sports and elections, seeking to maintain separation between Wall Street-style financial trading and gambling.

Coplan’s backers understood the regulatory risks. “Shayne might end up a billionaire, or a CFTC casualty,” New Form Capital, an investor in Polymarket’s seed round, wrote in a 2020 memo obtained by The Wall Street Journal. After the January 2022 CFTC settlement and $1.4 million fine, Coplan pressed forward, raising fresh venture capital funding. The platform continued attracting users who attested they weren’t American—a requirement many ignored.

The Federal Investigation Begins

In spring 2024, the U.S. Attorney’s Office for the Southern District of New York opened a criminal investigation into whether Polymarket was violating anti-money-laundering laws or operating as an unlicensed money transmitter by serving U.S. users without proper licenses, according to people familiar with the investigation cited by The Wall Street Journal. The Biden administration was then aggressively pursuing crypto enforcement. Binance, the world’s largest crypto exchange, had recently pleaded guilty to similar violations.

President Biden’s disastrous June debate performance triggered a surge of bets that he would drop out of the race, spotlighting Polymarket. Coplan attempted to cultivate relationships with both parties but found warmer reception among Republicans embracing the crypto industry. During the Republican National Convention, a photo circulated showing Coplan with Donald Trump Jr., Omeed Malik (founder of 1789 Capital), David Sacks (now White House crypto czar), and other tech investors.

Coplan recalled the group welcomed him enthusiastically. “These guys were like, ‘Oh, Polymarket’s awesome. It is what I’m checking, it’s useful, you know, it’s better than polls,'” he told The Wall Street Journal. Republicans had additional reason to celebrate: as the election approached, Polymarket’s markets suggested Trump would likely win, even as polls showed a dead heat with Kamala Harris.

Expanding the Probe and the Election Factor

Federal investigators expanded their probe to include potential wash trading, according to people familiar with the investigation. They wanted to determine whether Polymarket knew it was serving U.S. users—a violation of the CFTC settlement that would demonstrate the company was breaking anti-money-laundering laws. Such laws require financial businesses serving Americans to verify customer identities and implement other safeguards.

Investigators obtained a search warrant for Coplan’s electronic devices, believing they might contain evidence of communications with customers he knew were American. After senior Justice Department officials worried any search might appear as political interference, the raid was delayed until after Election Day, according to people familiar with the matter cited by The Wall Street Journal.

Trump’s victory validated Polymarket, largely silencing critics who had suggested the platform was being manipulated in Trump’s favor. The prediction market had called the race more accurately than traditional polling. 1789 Capital made its first Polymarket investment before the election. After Trump won, Donald Trump Jr. became a 1789 partner and the firm invested again. Neither investment was publicly disclosed at the time. All told, 1789 Capital has invested at least $10 million, according to a person familiar with the matter.

The Dawn Raid and Political Backlash

Days after the election, Coplan attended a Las Vegas meeting of the Rockbridge Network, a Trump-aligned donor group. Shortly after returning to New York, FBI agents broke down his door with a battering ram. Polymarket denounced the raid as “obvious political retribution” by the outgoing administration. The company’s lawyers arranged a meeting with senior prosecutors, where Polymarket attorney Orin Snyder heatedly accused the office of pursuing the probe at the Biden White House’s behest, according to people familiar with the investigation.

After Trump took office, the new administration scaled back crypto enforcement. Last April, Deputy Attorney General Todd Blanche instructed prosecutors to focus crypto cases on fraudsters harming investors and on financing of terrorism, drug trafficking, and organized crime. Polymarket’s lawyers reached out to Blanche’s office to complain about the continuing probe, submitting thousands of pages of documents and holding additional meetings pushing for the case’s closure.

Victory and Vindication

On July 1, Nicholas Roos—a federal prosecutor who co-led the case against fallen crypto tycoon Sam Bankman-Fried—informed Polymarket’s lawyers by letter that the investigation was being shelved. He cited information provided by Polymarket, as well as “relevant precedent and current policies of the Department of Justice,” according to a copy reviewed by The Wall Street Journal.

Coplan marked the one-year anniversary of the FBI raid by posting on X a picture of a cake. “Cheers to free markets, the American dream, and $3000/hr lawyers,” he wrote. The message captured both his relief and his combative approach to regulatory challenges. The dropped investigation cleared the path for Polymarket’s regulated U.S. launch and its $9 billion valuation.

The Road Ahead for Prediction Markets

Polymarket’s survival and explosive growth signal a broader shift in how regulators, investors, and the public view prediction markets. The platform’s accurate election forecasting—particularly its early call of Trump’s victory—has enhanced its credibility with mainstream institutions. Yet fundamental questions remain about market manipulation, insider trading, wash trading, and the wisdom of allowing largely anonymous betting on sensitive topics.

The company’s near-zero revenue despite its massive valuation raises sustainability questions. Can Polymarket eventually monetize its user base without driving them to competitors? Will institutional data partnerships generate sufficient income? And can the platform maintain its freewheeling culture while satisfying regulators demanding stricter controls?

Coplan envisions billions of people using Polymarket, with its predictions shaping government policy and helping citizens evaluate information credibility. Whether that vision materializes depends on navigating regulatory requirements, preventing manipulation, and proving that crowd wisdom can consistently outperform traditional forecasting methods. The platform’s journey from federal raid target to $9 billion company suggests Coplan has mastered the art of survival in hostile regulatory environments. Whether he can build a sustainable business model remains the ultimate test of his prediction market thesis.