Polymarket may face disputes over Ethereum ETF bets

Unclarity in the wager definition may bring in a potential $11m dispute

Decentralized prediction markets platform Polymarket is seeing a lot of action as traders put their money on whether a spot Ethereum ETF will be approved. However, the “approval” that has been referred to has not been clearly defined and this could lead to potential legal arguments since over $10m has been wagered so far.

This rise in bets comes after a surge in Ethereum prices that was driven by speculation that the US Securities and Exchange Commission (SEC) may approve spot Ether exchange-traded funds (ETFs). If such approval is eventually granted, analysts are predicting a substantial increase in the value of Ethereum, even going so far as to forecast that it could reach $6,600 per unit.

As a result, on Polymarket the odds of an Ether ETF getting approved by May 31 rose from 10% to 55%, while another prediction market wager indicated that there is a 68% chance for this to happen before June 30.

The SEC’s swift handling of 19b-4 filings has also served to buoy market sentiment since it suggests an inclination towards approval. Nevertheless, in spite of prevailing optimism, financial experts warn that while signs are positive, there remains the possibility of rejection.

However, before any trading can start both 19b-4 and S-1 filings need to be approved and the SEC decides only regarding the first one. This distinction has Polymarket users scrutinizing the fine print, anticipating a potential $11m dispute, reminiscent of past market controversies.

Yet, differing interpretations persist among bettors. Some assert that approval requires validation of both filings, citing precedent from previous markets. Conversely, others argue that any credible confirmation of approval should suffice, regardless of the specific filings.

So far Polymarket has not made any official comments regarding any potential disputes with bettors.

Last week, Polymarket announced it has raised $70m from investors such as Peter Thiel's Founders Fund and Vitalik Buterin, the co-founder of Ethereum. The funding took place in two rounds worth $25m and $45m, respectively.

With this money, the company plans to grow its prediction market platform globally while improving its operational capacity. Despite facing regulatory issues – notably being fined by the CFTC before – Polymarket is not swaying from pursuing expansion. In fact, under its newly appointed head of market expansion Richard Jaycobs, the platform hopes to reach even more markets.

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Written by Silvia Pavlof

Silvia has explored various forms of writing, ranging from content creation for social media to crafting movie scripts. Drawing on her experience as a journalist specializing in the gambling sector, she is currently investigating the impact of cryptocurrencies and blockchain on traditional gambling and iGaming.

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