“New phone, who dis?”
With those four words posted on social media, Polymarket’s 26-year old founder Shayne Coplan made light of a Kafkaesque turn of events that began when he reportedly woke on Wednesday to find FBI agents raiding his New York City apartment.
The exact reasons for the raid—during which Coplan’s mobile phone and electronics were confiscated—have not yet been fully revealed, though Americans are barred by law from gambling on offshore and unregulated betting platforms like Polymarket. But the blockchain-based prediction market company has already blasted the raid as “obvious political retribution by the outgoing administration” in comments made to multiple news outlets.
Polymarket odds greatly favoring Donald Trump were an early predictor of the groundswell of support that would sweep the former president back into the White House and wrest away the last remaining levers of the federal government still controlled by the Democrats.
Now as the final days run out on the Biden presidency, the search of Coplan’s residence and seizure of his personal belongings have raised questions over motive and proportionality.
‘Last ditch effort’ to prosecute hostile companies?
Many critics of the move, including in the crypto industry. are asking whether the administration deployed law enforcement resources just to gather evidence that might prove some Americans were illegally betting on his offshore platform, as Bloomberg reported on Wednesday, or whether an early morning raid at this juncture constituted harassment.
Brian Armstrong, who runs the regulated, onshore cryptocurrency exchange Coinbase, cautioned that such heavy-handed measures could backfire on the Biden administration, adding it “doesn’t look good”.
Fortune has attempted to contact the Federal Bureau of Investigations and U.S. Justice Department, while Polymarket could not be reached for additional comment.
The timing risks pulling the public’s attention away from the Trump transition team’s announcement it plans to put Rep. Matt Gaetz in charge of federal law enforcement, indirectly ending an ethics probe into the Florida congressman just as a potentially damaging misconduct report was set to be released.
“It’s discouraging that the current administration would seek a last-ditch effort to go after companies they deem to be associated with political opponents,” Coplan wrote, before adding the dawn raid would not alter his company’s non-partisan stance.
Coplan’s advice for the Democrats
While pollsters were still showing odds at a coin toss, Polymarket correctly foresaw Trump retaking the ‘Blue Wall’ of Wisconsin, Michigan and Pennsylvania and flipping back all the states that had swung to Biden in 2020.
One French national made an outsized $30 million-plus bet on Trump after analysing polls that asked which presidential candidate voters believed their neighbor would back—a tactical approach employed to reveal shy Trump supporters.
Yet Fortune also revealed evidence of potential market manipulation through so-called wash trading, a problem common to exchanges that use the blockchain to validate transactions between anonymous accounts rather than central counterparties.
Coplan, whose firm counts conservative donor Peter Thiel’s Founders Fund as an investor, had some advice in hindsight for the Democrats after they lost support among nearly every demographic across the political spectrum.
“The incumbents should do some self-reflecting,” wrote the Polymarket founder “and recognize that taking a more pro-business, pro-startup approach may be what would have changed their fate this election.”
