Two traders are suing prediction platform Polymarket over how it settled a high‑profile market tied to Strategy’s first Bitcoin sale in years. The case now raises big questions about whether decentralized betting sites must follow the real‑world timeline of events or their reading of the rules.
The lawsuit centers on a market that asked whether Strategy would sell any Bitcoin before May 31. Strategy later revealed in a June 1 SEC filing that it had sold 32 Bitcoin, worth about $2.5 million, between May 26 and May 31. In other words, the sale happened inside the deadline, but the public disclosure came one day after the market closed.
Polymarket proposed resolving the contract as “No,” arguing that no on‑chain data, public filing, or credible news confirmed the sale before May 31. After UMA token holders backed that view in dispute votes, the platform upheld the “No” outcome. As a result, “Yes” traders watched positions worth hundreds of thousands of dollars collapse to almost nothing and began accusing Polymarket of changing rules midstream.
Claims of Breach of Contract and Deception
The two plaintiffs say Polymarket breached its contract because the original market description focused on whether Strategy sold Bitcoin, rather than on when the sale was announced. They argue the platform later added language stating that “confirmation achieved outside of the market’s time frame does not qualify.”
The plaintiffs view the added language as a retroactive rule change. One trader told Benzinga, “I was just scammed,” after he said he lost around $500,000 on the “Yes” side. He says he suffered that loss when Polymarket stuck with the “No” settlement.
The suit also accuses Polymarket of deceptive acts and false advertising related to how it presented sources of resolution, such as SEC filings and on‑chain data. The plaintiffs claim the platform marketed itself as a neutral venue that would follow clear rules. They say it instead priced how its own team would interpret those rules after the fact.
Galaxy researchers have noted that, in disputes like this, prediction markets risk “pricing how the platform will read its own rules.” They argue this can happen rather than pricing what actually happened in the world.
As the case moves forward, legal and crypto experts are watching closely because the outcome could shape how decentralized prediction markets write and enforce their contracts.
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