Polymarket and its CEO Shayne Coplan are facing a lawsuit in New York state court over the settlement of a prediction market tied to whether Strategy sold any of its Bitcoin holdings before May 31, 2026.
The suit was filed by William Wood and Thomas Bush in the New York Supreme Court on July 3, naming Polymarket, CEO Shayne Coplan, CMO Matthew Modabber, and other related entities as defendants. The plaintiffs are represented by Burwick Law, PLLC, and seek damages for what they describe as deceptive practices that undermine trust in prediction markets.
What the Market Asked and What the SEC Filing Said
The case centres on a binary market asking whether Strategy Inc., formerly MicroStrategy, would sell any Bitcoin by May 31, 2026. The plaintiffs held "Yes" shares in that market. Strategy disclosed in a Form 8-K filing on June 1 that it sold 32 BTC for roughly $2.5 million between May 26 and May 31, marking the firm's first Bitcoin sale since December 2022. Plaintiffs argue this constituted unambiguous proof that the event occurred, and purchased their "Yes" shares believing the market would resolve in their favour based on that verifiable public record.
How the Dispute Escalated
Polymarket updated the market page with an additional context note stating: "Confirmation achieved outside of the market's time frame does not qualify." Traders argued that the rule being used to resolve the market was not clearly included in the original contract specifications, saying Polymarket effectively shifted the criteria from whether the underlying event occurred to when it was publicly confirmed. On June 3, the prediction market's final review concluded in a "No" after a UMA vote, which is used to resolve disputed markets on Polymarket.
One trader, willo2, claimed on X that he lost $500,000 after Polymarket allegedly kept the market open for betting on June 1, prompting him to place large "Yes" bets. Burwick Law has indicated it is reviewing additional claims from other Polymarket traders affected by disputed resolutions, suggesting the case could have broader implications beyond the two named plaintiffs.
Polymarket has not yet publicly responded in detail to the specific complaint. The case is in its early stages, with a jury trial demanded. The outcome could set a precedent for how prediction market platforms handle edge cases involving corporate disclosures and timing disputes as the sector continues to grow.
Sources:
Two traders sue Polymarket over disputed Strategy bitcoin sale market (The Block)
Polymarket Sued Over Disputed Strategy's Bitcoin Sale Market Resolution (Crypto Times)
Polymarket faces backlash over disputed Strategy bitcoin sale market (The Block)
