Questions about who gets paid when a prediction market platform decides what counts as a win continue to bring various platforms into New York courtrooms, most recently Polymarket.
In March, everything He faced a lawsuit Due to withholding payments for “Ali Khamenei’s departure from the position of Supreme Leader?” market. A New York plaintiff says the exchange relied on a “death exception” to avoid paying out. Now Polymarket is making the same type of claim.
Two traders have now filed a lawsuit against PolyMarket in New York State Supreme Court on July 3, alleging that the exchange refused to redeem winning shares in a market that questioned whether the strategy would sell any bitcoin by May 31, 2026.
What do the plaintiffs allege in their lawsuit against Polymaket?
The disputed contract was part of a recurring series questioning whether Strategy, formerly known as MicroStrategy, would sell any of its bitcoin by a certain date.
The plaintiffs, William Wood and Thomas Busch, say Strategy has already sold, pointing to Bitcoin’s regulatory filing as evidence. They also stated that Polymarket rewrote the terms after the fact to resolve the contract with a “no.”
On June 1, Strategy filed a Form 8-K disclosing that it sold 32 bitcoin between May 26 and 31, its first disposition since December 2022.
The sale was valued at approximately $2.5 million with an average net price of $77,135.
Wood and Bush say the 8-K, which the market called the go-to solution, settled the binary question in favor of “yes.”
However, according to the complaint, Polymaket published clarifying language that shifted the context from whether Strategy had sold Bitcoin by the deadline to whether the sale had been publicly confirmed by then.
Plaintiffs say Polymarket overrode the event based on the timing of the disclosure and not the trading, which is what they made the market based on.
What clarification did Polymarket provide?
Galaxy research The episode was described as the most severe test of Polymarket’s accuracy stack since Zelenskyy’s $237 million suit market last year.
According to Galaxy Research, the original script is event-based. The contract resolved “yes” if the strategy sold “any of its bitcoins” by the deadline, with nothing requiring a sale to be announced in that window.
When the score reached 8K, the odds of “yes” rose from about 10% to 80%. One trader reportedly bought about 700,000 shares of Yes stock at a price of about 76 cents per share, treating it as an arbitrage.
The Polymarket team posted that there is no information that the strategy, on-chain data or reliable reports have confirmed the sale within the market time frame. “Confirmation achieved outside the market time frame is not eligible,” they added.
After publishing this post, Yes shares fell to less than a cent. After two disputes and a final 48-hour review, the contract was resolved “no” for a third time and settled near 99.7 cents on the “no” side for each Galaxy. The $301 million market was priced for a confirmed and recorded sale.
What claims are the plaintiffs making?
The lawsuit seeks damages for breach of contract, breach of both implied covenants of good faith, unjust enrichment, deceptive trade practices and false advertising under New York’s general business law.
They also criticized Polymarket’s marketing, which positions the platform as a place where “markets search for the truth,” noting that such claims are misleading if the platform can change its accuracy standards after learning the outcome.
Plaintiffs also allege that while settlement is conducted through the UMA Optimistic Oracle, Polymarket still retains control over drafting the rules and issuing clarifications.
Polymarket, like its market competitor Kalshi, has been on the receiving end of lawsuits from states and individuals alike. It is said to be a prediction market platform Under federal investigationas the Commodity Futures Trading Commission (CFTC) examined several parts of the business, including allegations that the company paid content creators to post videos showing simulated trades and fabricated gains, which Polymarket has not addressed publicly.
