South Korean police have identified and booked 26 Polymarket users on suspicion of illegal gambling after tracing their activity through public blockchain records, according to National Police Agency materials. The case is notable because the trades under scrutiny were made while the prediction market platform was still accessible from within Korea.
The Gangwon Provincial Police Agency’s cyber investigation unit began a preliminary inquiry in March and started booking suspects in May. Korea did not order domestic access to Polymarket blocked until Aug. 18, and authorities have said nobody in this case is accused of bypassing that later restriction.
Investigation timeline and scale
As of Sept. 15, police had booked 26 people and referred 18 of them to prosecutors over suspected gambling. The group is alleged to have staked a combined $12.7 million, or about KRW 17.6 billion, with the largest single trader accounting for $4.1 million, or roughly KRW 5.7 billion.
Police have said the investigation is ongoing, meaning both the number of suspects and the transaction totals could increase. The platform has since been blocked in Korea entirely, but the current case focuses on activity that took place before that access restriction was imposed.
How users were identified
Authorities said obtaining a conventional customer list from Polymarket was unrealistic because the service operates as a non-custodial peer-to-peer market with automatic settlement and no real-name roster of Korean users. Instead, investigators relied on the public nature of blockchain records.
Police said they used open-source intelligence analysis of on-chain transactions to identify and track individual users. The approach highlights how public blockchain data can be used in enforcement actions even when a platform itself does not directly hold user identities in the way a centralized operator might.
Why the trades are being treated as gambling
The suspects are being pursued under Article 246 of Korea’s Criminal Act, which covers illegal gambling. Police argued that resemblance to derivatives investing, and the lack of specific regulatory guidance for prediction markets, do not by themselves remove the conduct from the gambling provision.
Authorities pointed to Korean Supreme Court precedent stating that gambling can be established even if a participant’s own skill affects the outcome, so long as chance also plays some role. The source article noted that this formulation aligns with a 2008 ruling involving golf for money, where the court found that skill did not eliminate uncertainty over the result.
That legal framing goes to the center of the broader dispute over prediction markets. Supporters of such markets argue that participants assess political, economic, and social information, trade contracts on an order book, and can close positions before an event resolves, making the product closer to a crypto-based derivatives market than a simple wager.
Polymarket’s position and broader context
When Korean authorities ordered the site blocked in August, the national broadcasting and communications standards body cited a winner-take-all payout structure tied to events users cannot control. Polymarket responded that it does not offer a Korean-language service, does not accept payments in won, and should not be treated as the operator of a gambling venue because it does not hold user funds. Authorities rejected those arguments.
The article said Polymarket has been blocked or pursued in a growing number of jurisdictions, mainly in Europe. Korea’s decision to target users themselves stands out, though it is not entirely unprecedented: in November 2024, Tokyo police referred ten customers of overseas online casinos who had gambled with crypto as part of a wider sweep by 24 prefectural forces that identified 57 players.
What comes next
The immediate next step is prosecutorial review for the 18 people already referred, while police continue investigating the remaining booked users and any additional activity they may uncover. The core unresolved issue is how Korean courts will distinguish, if at all, between a prediction-market contract that can be traded before expiry and conduct that authorities classify as gambling.
That question matters beyond this single case because the dispute is not only about access to one platform, but about how event-based crypto markets are categorized when they combine market-style trading features with outcomes that still involve chance.
Source: news.bitcoin.com