Two Polymarket users have filed a lawsuit against the prediction market platform in a New York state court, alleging the company changed the rules of a Bitcoin-related market after the underlying event had already occurred.
The complaint, filed in the Supreme Court of the State of New York, names the company, its chief executive and chief marketing officer, and other unnamed defendants. The plaintiffs, William Wood and Thomas Bush, claim that Polymarket wrongly denied payouts to traders who correctly predicted the result of a market.
According to the lawsuit, the plaintiffs bought "Yes" shares in a market asking whether Strategy Inc., formerly MicroStrategy, would sell any of its Bitcoin holdings by May 31, 2026. The complaint points to a Form 8-K filed with the U.S. Securities and Exchange Commission stating the company sold 32 Bitcoin during the relevant period, arguing that outcome meant the market should have resolved as "Yes."
Instead, the complaint says Polymarket settled the market as "No" after adding clarification language that shifted the question from whether Strategy sold Bitcoin before the deadline to whether the sale had been by that date. The plaintiffs argue that the sale itself was the event participants were predicting, while the SEC filing merely documented that it had already occurred.
The lawsuit describes the disagreement as involving an objective and verifiable fact rather than an ambiguous prediction. It further argues that changing the governing standard after the event undermined the platform's promise that markets are resolved using fixed, pre-defined rules.
The complaint also alleges that Polymarket exercises significant control over market outcomes despite saying contracts are resolved through a third-party system. The plaintiffs cite the company's marketing, including statements that users can "profit from [their] knowledge" and that its markets "seek truth," alleging those representations influenced their trading decisions.
The lawsuit adds to a growing list of legal challenges facing Polymarket. Earlier this year, a proposed federal class action alleged the platform operates as an illegal sports gambling business while presenting itself as a lawful prediction market. Separately, the Commodity Futures Trading Commission has pursued civil insider trading cases tied to Polymarket.
The plaintiffs seek damages, restitution, injunctive relief, interest, attorneys' fees, costs, and payment of the alleged unpaid $1.00-per-share redemption value for their winning "Yes" shares.
