South Korea’s Gangwon Provincial Police Agency has referred 18 Polymarket users to prosecutors after tracing activity on the prediction market and identifying 26 bettors in total. Police said the group placed a combined 17.6 billion won, or about $12.7 million, on the platform, with the largest single stake reaching roughly 5.7 billion won, about $4.1 million.

The case could become the country’s first court test of whether trading on a prediction market such as Polymarket should be treated as illegal gambling or as a form of derivatives trading. So far, no South Korean court has ruled on that distinction.

Police traced users through public blockchain data

Investigators said they identified the users by following publicly available blockchain records and using open-source intelligence methods. That approach was used to work around the absence of a traditional customer database on Polymarket, which operates as a non-custodial, peer-to-peer platform.

Police booked 26 users overall and have now referred 18 of them to prosecutors. The remaining eight are still under investigation, and no referral decision has yet been announced for those cases.

Authorities say Polymarket contracts meet the definition of gambling

The users are being charged under Article 246 of South Korea’s Criminal Act. Police argue that Polymarket’s yes-or-no event contracts amount to gambling because participants stake assets on outcomes they cannot control.

That position focuses on the substance of the activity rather than the platform’s structure. According to investigators, the legal definition applies regardless of whether Polymarket is organized as a blockchain-based market rather than a conventional betting service.

Users dispute that interpretation

Polymarket users have challenged the gambling characterization, saying the platform functions more like a derivatives venue than a one-way wager. They point to features such as order-book trading and the ability to exit a position before the underlying event is resolved.

That disagreement is central to the legal issue now moving toward prosecutors and potentially the courts. The question is whether judges will view these contracts primarily as bets on uncertain events or as tradable financial instruments.

The referrals follow an August access block

The criminal referrals come after South Korea’s Korea Communications Standards Commission blocked domestic access to Polymarket in August. The regulator said the platform’s winner-takes-all structure and dependence on unpredictable real-world events created an illegal gambling environment.

The commission also rejected Polymarket’s argument that its non-custodial setup placed it outside the reach of Korean law. It said the absence of Korean-language service did not prevent the platform from falling under domestic enforcement.

What comes next

The 18 referrals now set up the first confirmed cases in South Korea that could test how prediction-market activity is classified in court. The immediate next step is prosecutorial review of the referred users, while the other eight booked individuals remain under investigation.

Any eventual ruling would be closely watched because it may clarify whether Polymarket-style contracts are treated under South Korean law as gambling, as police and regulators contend, or as a form of derivatives trading, as some users argue.

Source: www.blockhead.co