South Korean police have launched the country’s first known criminal investigation into domestic users of Polymarket, a blockchain-based prediction market platform. The case marks a shift in enforcement focus, with authorities examining whether individual participation in event-based trading violates national gambling laws.

According to a report by Chosun Biz, the Gangwon Provincial Police Agency leads the investigation following a request from the National Police Agency. The probe targets users across the country, including residents in Gangwon Province, and centers on alleged illegal gambling activity tied to the platform.

Polymarket allows users to trade positions on real-world outcomes such as elections, sports events, economic data releases, and geopolitical developments. The platform operates on the Ethereum blockchain and uses smart contracts to settle outcomes without a central intermediary. South Korean authorities now assess whether such activity qualifies as gambling under existing law.

South Korea maintains strict controls over betting activity. Only state-authorized systems such as Sports Toto operate legally, with a wagering cap of 100,000 won, or about $65. Other forms of private betting fall under restrictions outlined in Article 246 of the Criminal Act.

Authorities are reviewing whether Polymarket participation meets the criteria for gambling or habitual gambling offenses. Violations can carry fines of up to 10 million won. The structure of prediction markets has become a central issue, as users do not place traditional bets with a bookmaker but trade contracts tied to event outcomes.

Attorney Ahn Chang-bo, who represents some of the users under investigation, addressed the legal uncertainty in comments to Chosun Biz. He said,

"It appears that the elements constituting the crime of gambling are met. However, since there have been absolutely no domestic cases of punishment for using polymarkets, it is difficult to predict the level of punishment."

The absence of precedent creates uncertainty for both users and legal experts. The case may define how decentralized platforms fit within South Korea’s gambling framework.

Election markets draw enforcement attention

The investigation focuses in part on activity linked to South Korea’s June 3 local elections. According to Chosun Biz, betting volumes tied to these markets reached hundreds of billions of won. Authorities noted that users accessed the platform directly and placed trades using dollar-backed stablecoins.

Polymarket did not require local verification barriers that would prevent South Korean participation. This accessibility appears to have contributed to the scale of activity observed during the election period.

The political nature of these markets has drawn additional scrutiny. South Korean law does not authorize betting on election outcomes, which places such activity outside regulated channels.

Enforcement expands beyond centralized platforms

The probe reflects a broader shift in South Korea’s approach to crypto-related enforcement. Authorities have shown a willingness to apply existing laws to decentralized systems, even when no local operator exists.

In May, prosecutors charged several individuals in connection with the CATFI meme coin case, described by Digital Asset as the country’s first prosecution involving a decentralized exchange under the Virtual Asset User Protection Act. Prosecutors alleged that the group promoted a Solana-based token through misleading posts before executing a rug pull that caused investor losses.

Officials stated that enforcement efforts no longer focus only on centralized exchanges or locally listed tokens. The Polymarket case extends that approach to user activity on decentralized platforms.

Global scrutiny intensifies around prediction markets

Regulatory attention on prediction markets has not remained limited to South Korea. In the United States, authorities charged Google software engineer Michele Spagnuolo in a case tied to Polymarket. Prosecutors alleged he used confidential company information to profit from contracts related to Google search rankings.

The Commodity Futures Trading Commission also filed a civil complaint in connection with the case and reiterated that insider trading laws apply to prediction markets. The platform has faced additional legal challenges across several U.S. states, where regulators debate whether such markets fall under derivatives trading or gambling categories.

These developments highlight a broader regulatory question. Authorities must decide whether event-based contracts represent financial instruments, informational tools, or illegal betting mechanisms.

Case may set precedent for decentralized platforms

South Korea’s investigation stands out due to its focus on individual users rather than platform operators. Polymarket runs on decentralized infrastructure, which limits direct enforcement against the platform itself. Authorities instead examine the actions of participants who access the service within national jurisdiction.

The outcome could influence how other countries approach similar platforms. South Korea has a large retail crypto market, and enforcement decisions often shape regional trends. A ruling that classifies prediction market participation as illegal gambling could affect user behavior and platform accessibility.

Developers and investors now face a more complex environment. Decentralized access does not remove legal obligations tied to location. This case highlights the gap between global blockchain infrastructure and local regulatory frameworks.

For now, the investigation continues without a clear precedent. Legal interpretation of prediction markets remains unsettled in South Korea, and the outcome may define how authorities handle similar cases in the future.

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