House Oversight opens probe into Polymarket over suspected insider trading; exchange says it's investigating an exploit

James Comer opened a House Oversight Committee investigation into Polymarket on May 22, adding congressional scrutiny to a separate security incident the prediction-market platform said it is already investigating. The Kentucky Republican sent letters to Polymarket Chief Executive Shayne Coplan and Kalshi Chief Executive Tarek Mansour seeking documents about insider-trading safeguards, account verification and efforts to block U.S. users from offshore platforms. On the same day, Polymarket said it was probing what it described as a suspected exploit involving internal wallets on Polygon. The two developments put the company under pressure on both market integrity and custody. ### Why is Congress asking Polymarket for documents now? The House Committee on Oversight and Government Reform said Friday it is examining whether users of prediction-market platforms used material nonpublic information to place trades. In his letter to Coplan, Comer said the committee wants to understand how Polymarket verifies users, enforces geographic restrictions and detects anomalous trading activity. A New York Times investigation cited in Comer’s letter said more than 80 Polymarket users placed suspiciously timed bets, including wagers made hours before undisclosed U.S. and Israeli strikes in Iran. CNBC reported Comer announced the probe on “Squawk Box” and said he was seeking information from both Polymarket and Kalshi about their efforts to prevent insider trading. (oversight.house.gov) ### What exactly did Comer ask Polymarket to hand over? June 5 is the deadline Comer set for Polymarket and Kalshi to produce documents and information responsive to the committee’s requests. The letter asks for records on internal policies and procedures related to insider trading, suspicious-activity detection, identity verification for domestic and international users, and compliance with U.S. restrictions. (cnbc.com) The Oversight Committee also asked how Polymarket prevents offshore access from being used to circumvent U.S. federal regulations governing prediction markets. The request indicates the committee is looking not only at trading patterns but also at the platform’s compliance controls and surveillance systems. That framing comes directly from Comer’s letter. (oversight.house.gov) ### What happened onchain at the same time? The Block reported on May 22 that Polymarket was probing a suspected private-key compromise of an internal top-up wallet on Polygon. The report said onchain investigator ZachXBT flagged suspicious outflows and that roughly $660,000 had been drained from two addresses. Polymarket said in a statement reported by The Block that user funds were not affected and that the incident involved internal addresses. (oversight.house.gov) The company said it was investigating and working to understand the scope of the suspected compromise. ### Are the insider-trading probe and the wallet incident the same issue? Friday’s two developments involve different questions. Comer’s inquiry focuses on whether Polymarket had adequate controls to detect and prevent insider trading and improper access to its platform, according to the committee’s letter. (theblock.co) The Polygon incident concerns custody and key management. (theblock.co) The Block’s reporting described it as a suspected private-key compromise tied to an internal wallet, not a congressional allegation about trading on event contracts. ### What happens next for Polymarket? June 5 is the next concrete date in the congressional matter. By then, Coplan and Mansour are expected to answer the committee’s questions and produce requested records, according to Comer’s letters. (oversight.house.gov) Polymarket has not publicly released a final accounting of the Polygon incident. The next steps there are likely to come through company statements or additional onchain findings, while the House inquiry will proceed through the document requests Comer issued on May 22. (theblock.co) (oversight.house.gov)