South Korean police prosecute 26 Polymarket users

South Korean police have opened criminal cases against 26 users of prediction platform Polymarket for alleged illegal gambling. Eighteen of them have already been referred to the public prosecutor’s office. Together, those involved staked the equivalent of around $12.7 million on the platform, with one user alone accounting for more than 5.7 billion won, equivalent to about $4.1 million.

In brief:

• South Korean police charge 26 Polymarket users with illegal gambling, eighteen have already been referred to the public prosecutor’s office.
• The total stake of the suspects amounts to 17.6 billion won ($12.7 million), with one person alone staking 5.7 billion won.
• Polymarket was blocked in South Korea on 18 August; the question of whether the platform should be regarded as a gambling venue or a derivatives market remains legally undecided.

Blockchain records lead police to users

According to data that South Korean MP Yoon Geon-yeong requested from the national police, the cyber police of Gangwon province carried out the investigation. Polymarket operates as a non-custodial platform without central administration of usernames, which normally makes the identity of participants difficult to trace.

The police circumvented this by combining public blockchain transaction data with OSINT techniques, which use publicly available online information to identify individuals. In that way, they succeeded in linking individual users to specific transactions, Asia Economy reports.

Legal battle over definition of gambling

The police argue that activities on Polymarket fall under Article 246 of the Criminal Code, which prohibits gambling. The argument is that the legal classification must be based on the actual structure of the transaction and not on the name given to it. Because participants stake virtual assets on outcomes that are partly determined by chance, the legal requirements for gambling are met, according to the police, even if participants’ skills have some influence on the outcome.

The accused users dispute that. They argue that Polymarket should be seen as a market for derivative financial products based on crypto, not as a gambling venue. Lawyer Kim Tae-rim of AXIS Law notes that the platform’s order book system, in which users buy and sell chance contracts and can also close positions before expiry, differs structurally from traditional gambling. According to him, how the judge assesses that difference will become the core of the case.

The South Korean broadcasting and media regulator had already decided on 18 August to block access to Polymarket. Polymarket responded at the time by stating that the platform does not offer a Korean service, does not process payments in won and does not itself manage user funds. The regulator rejected that reasoning and stated that technical characteristics are no reason to circumvent national legislation.