Two Polymarket users have sued the prediction market platform in New York state court, claiming the company changed the rules of a Bitcoin-related market after the underlying event had already happened and wrongly denied payouts to traders who correctly predicted the result.
The complaint, filed in the Supreme Court of the State of New York, names several defendants, including the company's CEO and CMO, as well as additional unnamed defendants.
The lawsuit claims that plaintiffs William Wood and Thomas Bush bought "Yes" shares in a market asking whether Strategy Inc. would sell any of its Bitcoin holdings by May 31, 2026. They argue that the company sold 32 Bitcoin during the relevant period, which meant the market should have resolved as "Yes," but instead, Polymarket settled the market as "No" after adding clarification language.
The plaintiffs argue that the sale itself was the event participants were predicting, and that the SEC filing merely documented that it had already occurred. They describe the disagreement as involving an objective and verifiable fact rather than an ambiguous prediction.
The lawsuit alleges that Polymarket's actions undermined the platform's promise that markets are resolved using fixed, pre-defined rules. The plaintiffs also cite Polymarket'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 complaint also contends that Polymarket exercises significant control over market outcomes despite saying contracts are resolved through the UMA Optimistic Oracle. The company drafted the rules, controlled the interface, posted the disputed clarification, kept trading open afterward, and ultimately accepted the final outcome.
The case 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.
Wood and Bush seek damages, restitution, statutory and treble damages, injunctive relief, interest, attorneys' fees, costs, and payment of the alleged unpaid $1.00-per-share redemption value for their winning "Yes" shares.
