The US government might be cracking down on Polymarket
FBI agents reportedly confiscated Polymarket CEO Shayne Coplan’s phone and devices on Wednesday
Polymarket and Adobe Stock modified by Blockworks
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Blockchains, when implemented correctly, transcend borders. And US authorities can’t seem to stand it.
All anyone ever really needs to use crypto is a halfway decent device and an internet connection. Even by satellite.
To the blockchain itself, your location or nationality isn’t a factor. Bitcoin, Ethereum and Solana don’t care if you’re signing transactions from a cafe in Belize, a WeWork in New York or the mountains of Nepal.
But your IP address — and thus your approximate location — is logged when you use most services built on top of those blockchains. MetaMask collects user IP addresses when using its default relay Infura, for instance, which caused a big fuss when it was found in its privacy policy in 2022.
Uniswap Labs says it does not retain personal information, including IP addresses, but the data is still transmitted to its servers whenever you visit its website.
It’s part of how the internet works, and it allows Uniswap and MetaMask front-ends to geoblock visitors from OFAC-sanctioned jurisdictions. The law states that giving crypto access to users based in those countries would constitute sanctions evasion and even terrorism financing.
It’s also how Polymarket can restrict US users from accessing its platform. If their website’s backend detects an IP address from a local service provider, they’ll be shown an unclosable popup telling them to scram.
Most crypto apps and services do the same or risk a visit from a three-letter agency.
FBI agents reportedly confiscated Polymarket CEO Shayne Coplan’s phone and devices on Wednesday over concerns that US-based users were skirting Polymarket’s geoblock, which has been in place since a CFTC penalty in 2022.
At this point, the geoblock is one of the last “gotcha” tactics from regulators. Of course, geoblocks aren’t completely effective. A basic VPN gets around them, so it’s entirely imaginable that US-based users indeed gambled on the US election via Polymarket.
That’s how Binance was stung by the US government this time last year — knowingly allowing users from the US, as well as sanctioned countries including Iran, to trade on the platform. Binance settled for a combined $4.4 billion over the charges.
Authorities stated that Binance executed more than 1.67 million trades between US persons and users in sanctioned locations across five years. Polymarket handled more than 12 million trades in October alone.
How many of those trades included someone in the US? Who knows, and over a long enough timeline, that question will become practically unanswerable.
Anyone from any jurisdiction in the world can, hypothetically, code their own transactions and interact with these smart contracts directly, or at least, fork an app and run the instance themselves without the geoblocking functionality.
After all, there is no need for VPNs to avoid geoblocks if you trade on Uniswap via the command line.
Perhaps blockchain-enabled AI agents that handle our crypto for us directly will be the answer.
Apparently, for US-based crypto entrepreneurs like Coplan, they can’t come soon enough.
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