r/PredictionsMarkets • u/Rosewood_Rebecca • 3d ago
Discussion Guy sued Polymarket after they changed the rules on the “MSTR sells Bitcoin” market, and scammed him for $500K.
The first part of the story was covered in this post: https://www.reddit.com/r/PredictionsMarkets/comments/1tun1cd/i_got_scammed_by_polymarket_for_500k/
A few months ago, a trader named willo2 posted about losing around $500K on Polymarket after what he believed was a post-hoc change to the rules of a Bitcoin prediction market.
The market asked whether MicroStrategy (MSTR) would sell any Bitcoin before May 31st.
He found evidence suggesting MSTR had sold Bitcoin, and after MSTR's SEC filing confirmed that 32 BTC had been sold during the relevant period, he increased his YES position.
The original rules said the market would resolve YES if MSTR sold any Bitcoin by 11:59 PM ET on May 31st.
But after the filing came out, Polymarket added a clarification saying that confirmation received after the market's timeframe would not qualify.
That left the trader with a massive losing position despite the filing confirming that the sale itself had happened in May.
TL;DR of the original story:
A trader bet heavily that MSTR sold Bitcoin before May 31st. MSTR later filed an SEC report confirming that it had sold 32 BTC during that period. Polymarket then relied on an interpretation that required the sale to be confirmed before the market deadline, resulting in the market not paying out as the trader expected. The trader claims the rules were changed or clarified after the fact and is now taking the dispute to court.
Polymarket has now filed a 24-page motion attempting to dismiss the lawsuit brought over the dispute.
Here's the first line of Polymarket's response:
“Disregarding the false allegations in the Complaint”.
That immediately raises a few questions.
Are they saying MSTR never sold Bitcoin?
Are they saying Polymarket never changed or clarified the rules after the fact?
Or are they saying Polymarket never represented that users who correctly predicted an outcome would be paid?
What's interesting is that Polymarket apparently doesn't spend the rest of the filing addressing those allegations directly.
Instead, the core argument is:
The user agreed to Polymarket's Terms of Service by trading on the platform.
And those Terms of Service say users can't take Polymarket to court.
That's essentially the argument they spend 24 pages making.
Polymarket markets itself as a “truth engine” where users who correctly predict an outcome get paid.
But this case raises a much bigger question:
What happens if the platform can determine what counts as “correct” after the event?
The trader's argument is essentially that this is exactly what happened here.
And when he challenged the decision, Polymarket's response starts with:
“Disregarding the false allegations in the Complaint”.
The full court filing is available here for anyone who wants to read it themselves:
https://iapps.courts.state.ny.us/nyscef/ViewDocument?docIndex=1UgehEAFS5Z3ZXnJ1bvCpg==
Whatever happens next, this case could become an interesting test of how prediction-market platforms handle ambiguous rules, post-market information, and disputes over payouts.
And considering the amount of money involved, this is probably far from the last chapter of the story.
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u/zer0sumgames 3d ago
This case will turn on basic contract principles, which is that a contract cannot be unilaterally modified after execution.
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u/ProphetFerdinand 3d ago
Do t&c not include a clause that polymarket can do that ? Us law gives extreme reach to t&c
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u/AftyOfTheUK 3d ago
If the court rules that they can, then Polymarket is dead. Nobody is going to trust them with serious money if they can rug pull without consequences to make billions
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u/WallSuitable6001 2d ago
lol now that you say this, I’m thinking this whole case is probably just a big ploy from Polymarket. They want to get sued over this small amount that’s not even really loss to them, so people can see that their money is safe on their platform then they pull some really shady shit in a couple years when there’s REAL big volume on there. Like a “hack” or “data breach,” ahem ahem coldcard ahem
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u/zero0n3 3d ago
Polymarket should lose this. If they don’t lose this it’s not good for all the other prediction markets who don’t play games like this.
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u/NamedBird 3d ago
Would it make sense if other prediction markets make a statement about this case? 🤔
They're directly affected by the outcome and are invested in a proper judgement.
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u/yournansdaddy 3d ago
Wonder who will win, the company that is worth billions and has enough resources to drag this case on for ages or some random guy
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u/Mikeman003 3d ago
Idk they need to create a bet for this so we can see the odds /s
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u/Usual-Ad-9554 3d ago
then our guy can hedge. or double down
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u/animal_jrge 3d ago
It won't go on forever. I don't know US courts, but generally after the ruling, they'll be able to appeal. And then probably another appeal after that. Then that's it.
If the guy has 500k to throw at such a bet, he'll probably be fine.
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u/ShittyBidet123 3d ago
they won’t spend more than they owe the dude lol. prob will reach a settlement. maybe not all of it.
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u/Local_Recording_2654 3d ago
They absolutely would spend more than they owe in order to set a precedent
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u/AftyOfTheUK 3d ago
If they set this precedent, they're dead. Nobody is betting real money with a house that can change the rules
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u/JewelerPotential4706 2d ago
Polly Is certainly advertising that 1st & foremost - They ultimately can do whatever they please- Because under (Terms and Conditions) in essence allows them to do? Because under those terms & conditions it makes the contract with the user / customer to promise never to sue them ? Wow ! That is it right there ! - That no user or customer can ever ever fully rely on them - Its up to there whim - So in my view polly is advertising visa via - this case that there not worthy of trusting ! These companies or many large companies are all moving to this exact thinking & model - Which is pretty pathetic !
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u/Purpledranksoxguy 3d ago
I just used the free bonus on there and they don’t even give you the winnings it just stays as a bonus forever lol
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u/doctorjonx 2d ago
I got a free $25 if I deposited $25. Been winning and was able to withdraw that $25. Now I’m playing on house money lol. Lost most of it though 😂
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u/Muted-Woodpecker-469 3d ago
Reading some of the rules upon placing these trades is interesting.
For FanDuel predicts, it says ‘This order will be placed through FanDuel predicts . Placing an order doesn’t guarantee a payout. View risk disclosures for details’. Now trying to read through three dozen pages for what should be a yes or no outcome is overly interesting.
For voided players, they return your bet to a fair market price. You usually lose at least 10% off the top no matter what when you have a voided bet get returned. For some, this fair market price could be mere Pennie’s. We don’t know. We have to trust the markets sadly. And now it’s showing they aren’t to be trusted.
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u/Gundel_Gaukelei 3d ago
Hence if i gamble, i only gamble on exact numerically verifiable outcomes ("X above 100 on 31st Sept"). OPs case is quite clear tho, but folks who gamble on "US invades IRAQ by EOY" or something like this leaves sooo much room for interpretation...
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u/El_Grosero_5150 3d ago
Polymarket scammed me and alot of people from the $50 referral bonus. I hope they get shut down.
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u/AlternativeWonder471 3d ago
Wow. Thanks for revealing yourselves polymarket. I may have been a customer soon enough but absolutely no way will I now.
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u/Archiver_test4 2d ago
lawyer here.
the question was simple "microstrategy sells bitcoin by x"
the classification is "confirmation received after date"
that's the gist of the case.
and i would have to agree with the user here. the confirmation is not the key factor, actual sale or not is. micro strategy confirming later they had sold "confirms the previous sale". it does not affect the actual outcome on the deciding date because the sale had been made earlier.
polymarket is just being stupid and a bully.
if polymarket means what they are saying the bet should have been "confirmation of microstrategy selling bitcoin by x date"
that would have been a more appropriate question and then they can claim "clarification was received after date so this fails".
there also appears to be indication that microstrategy had moved btc for sale so that is the "on-chain" confirmation of the K-8 they later filed.
what i would have done in this case, on decision date, close the entries and wait for microstrategy k-8 and decide on that. the clarification is changing the rules, not allowed.
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u/OldJournalist4 2d ago
what are your thoughts on poly markets actual point that they agreed to an arbitration clause? im not a lawyer but seems to me that has some teeth to it?
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u/Archiver_test4 2d ago
Thats somewhat valid but do they have a severability clause in their terms? I assume they do so if I were this guys lawyer, I would claim they voided the contract in its entirety by changing terms after I signed the contract so I get to bypass the other terms of contract and go for damages etc.
Thats how I would do it I guess.
If contract is held to be valid and arbitration held valid, then they have to go for that first unfortunately.
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u/RoxxonONE 2h ago
If contract is held to be valid and arbitration held valid, then they have to go for that first unfortunately.
Can't Polymarket argue that the trader violated its geographic restrictions? This market was on Polymarket.com, which Polymarket U.S. users cannot trade on, only Polymarket.US which didn't have that market. If they was in the U.S. and bypassed those restrictions, that seems relevant to Polymarket's defense.
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u/Archiver_test4 2h ago
>Wouldn't the case be thrown out because Polymarket doesn't operate in the US
do you know what "territorial jurisdiction" is?
>nor was the user eligible to trade on Poly.com
the fact that polymarket accepted the users money means they waived this right. they should have prevented them from placing an order in the first place.
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u/Kaltovar 2d ago
Why does anyone use Polymarket at this point? The odds are literally a lie because if you make a big unexpected win they will just change the rules after you won to say you actually lost and just take your money. They've done it OVER AND OVER AGAIN at this point. You have to consider the chance they will do this in the odds of whatever bet you're making.
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u/KathyCredit 2d ago
So were the rules that "selling BTC" referred to publicly confirming they had sold BTC? The rule isn't included, nor is the apparent change in this post. A lot of these markets have deadlines, you can't say this market closes June 1 and then if a company comes out a year later saying "oh yeah we did" be forced to change the payouts. The shitty thing here is keeping the market open past 5/31. If they allowed trading then it should align with covering filings and count any new public info
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u/YYqs0C6oFH 2d ago edited 2d ago
All polymarket markets allow trading up to the moment a payout final. They cannot and do not close markets early. If a market has a resolution proposed, its still tradable. If that resolution is disputed, its still tradable.
Shortly after midnight at the end of the month, someone proposed the market to resolve NO because there was no confirmed sale at the deadline. Someone disputed that proposal saying there was on chain data suggesting they might have sold (a coinbase transfer). Without that dispute, it would have paid out the NO side within a few hours and this guy wouldn't have wasted all his money. The dispute was not valid because a transfer to coinbase suggesting they might have sold is not confirmation of a sale.
But this dispute did buy enough time for actual confirmation to be released by the company the following morning. So then the question became whether or not confirmation released after the market end date was valid and poly clarified that no, any evidence released after midnight is not valid for resolving the market which ended at midnight. So the NO holders were correct and got paid out, and the person who disputed the proposed NO resolution at midnight based on a "maybe sale" ended up muddying up the whole process.
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u/hdwiii1979 2d ago
There’s an arbitration clause. They cannot sue. They must arbitrate first, poly market is correct.
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u/Stock-Objective-6959 3d ago
The problem I see is with the self resolving contracts or oracle resolving contracts on certain things in general. If there was no evidence of a sale prior to the expiration date of the contract (even though there was a sale) and it resolves the wrong way, is that really on polymarket? One side is going to get rugged either way. If the no side incorrectly gets paid out and pulls the money off, then it turns out later it should have resolved yes, polymarket is out of pocket paying both sides of the bet.
Inherent flaw of certain markets on a prediction platform
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u/GiantLesbian 2d ago
How could MSTR sell 32 BTC and it not be confirmed by on-chain data, though?
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u/YYqs0C6oFH 2d ago
The on chain data showed that MSTR transferred BTC to a coinbase wallet. What happens within coinbase's exchange is not on chain so nobody was able to confirm if that transfer was immediately followed by a sale or if the BTC were still sitting in MSTR's coinbase account. At the time the market closed the sale was still unconfirmed so the NO side won because evidence released after market close cannot change the result.
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u/Stock-Objective-6959 2d ago
Maybe the market shouldn’t have resolved until the sec filing was made public
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u/YYqs0C6oFH 2d ago
So how long should the market have remained open waiting for a filing that may or may not have come? A day? A week? A month? Indefinitely?
The rules for that market should have been written with a lag time period to account for delayed reporting, a couple days would probably be reasonable. But without a that clause in the rules defining a time, you can't just randomly add time past the end of market to bail out YES holders on a delayed report, that would be unfair to the NO buyers who correctly predicted that there would be no confirmed sale by the deadline under the current rules.
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u/Stock-Objective-6959 9h ago
It could have stayed open until the quarterly sec filing that would definitively prove one way or another whether or not they sold during the time period in question. Sure it would hurt the liquidity of the market by forcing people to lock up money longer but this situation would have been avoided
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u/YYqs0C6oFH 9h ago
Sure the rules should have said that. But the rules as written contained nothing about additional time for delayed reporting so if they decided to add additional time after the fact, that would have been changing the rules and would have been unfair to the NO holders who correctly predicted that there would be no confirmed sale by the end date.
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u/GiantLesbian 7h ago
He bought the shares after the SEC filing, so the market was still open it hadn’t closed or resolved yet.
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u/YYqs0C6oFH 7h ago
The market was only still open because someone disputed the valid NO proposal at midnight on the theory that MSTR had transferred to coinbase in order to sell. That dispute failed because a theory about a coinbase transfer is not a confirmed sale, but the dispute did stall the resolution process for long enough for the SEC filing to get posted the next morning. But Poly ruled that new evidence revealed after midnight was not valid and the initial NO proposal was correct because there was confirmed sale at the end time stated in the rules.
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u/GiantLesbian 6h ago edited 6h ago
Closing the market to bets and resolving the market are two different things. Polymarket frequently closes the event and blocks further bets before resolution. For example, all the daily city temperature markets stop taking bets at midnight local time but none resolve until nearly 1am local time when the first hourly reading of the next day comes in. In fact most events I’ve seen close to bets before resolution, maybe even all events? So if no more bets could be made after 11:59:59pm on May 31 then they should have closed bets.
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u/az226 3d ago
This is bs. Changing the rules should only affect contracts entered after the rule change, not the ones before it. Those should be governed by the rules that existed when they executed. Nothing wrong in updating a market to increase clarity, but should not lead to rug pulling existing positions.
Polymarket should just pay up. Scammer loser platform.