Polymarket’s rapid U.S. expansion faced severe strain in February 2026 after fraudsters attempted a $10 million stolen-debit-card fraud scheme. Payment processor Checkout.com rejected over 80% of deposits as fraudulent, while CEO Shayne Coplan allegedly urged staff to prioritize growth and pay potential fines later, according to an investigation published on September 20, 2026.
How Stolen Debit Cards Triggered an 80% Deposit Rejection Rate
For several weeks in February 2026, Polymarket’s newly regulated American platform experienced a wave of fraudulent transactions that severely tested its automated safeguards. Fraudsters linked stolen debit cards to thousands of newly created accounts, placed wagers, and then attempted to route winnings onto clean cards or controlled accounts, as detailed in an investigation published by The Wall Street Journal on September 20, 2026. The attempted illicit volume reached at least $10 million, though reporting noted that most attempted deposits ultimately failed and it remains unestablished exactly how much money left the platform.
Payment processor Checkout.com, which handles debit-card funding for Polymarket US, flagged the suspicious surge immediately. At the peak of the attack, Checkout.com rejected more than 80% of the deposits it processed for the platform as fraudulent. That figure stood dramatically higher than the roughly 1% industry norm. Investigators found that about seven users drove the majority of the activity, with a single user attempting approximately 4,000 deposits.
Executive Push for Growth Despite Compliance Warnings
When compliance personnel escalated the fraud wave to Chief Executive Officer Shayne Coplan, they were met with resistance. Current and former employees reported that Coplan instructed the team to keep expanding and suggested paying a regulatory fine if authorities ever intervened. Sources familiar with the exchange described the compliance staff as “floored” by the directive, which aligned with an internal culture favoring rapid growth over strict friction.
The pressure to scale intensified following Polymarket’s entry into the regulated U.S. market in December 2025. The parent company had acquired a licensed exchange for $112 million and converted it into an American platform operating under an Amended Order of Designation from the Commodity Futures Trading Commission (CFTC). While the platform attracted more than $500 million in initial deposits, international trading volumes vastly outpaced the U.S. app during its early months. To accelerate sluggish American adoption and appease users frustrated by withdrawal delays, leadership eliminated a standard financial safeguard requiring funds to be withdrawn back to the same payment method used for deposit. Although former federal enforcement officials criticized the removal, executives maintained that alternative internal controls were sufficient.
Joe Konizeski, a former CFTC enforcement lawyer, said that in the regulated space this kind of failure does not occur, and that firms handling customer money are expected to verify sources and maintain proper controls.
Regulatory Fallout, Executive Departures, and Security Overhauls
The fallout from the fraud wave triggered high-level departures across the company. In April 2026, Andrew Clifford, the Chief Compliance Officer of Polymarket US, resigned after submitting an internal report detailing the fraud issues. Shortly thereafter, U.S. division CEO Justin Hertzberg was fired, alongside the heads of American regulation and Anti-Money Laundering. An outside review conducted by the law firm Sullivan & Cromwell subsequently concluded that Polymarket had complied with applicable regulations.
By May 2026, fraud rates had retreated toward industry norms after the company instituted stricter limits on attached debit cards, partnered with fraud-prevention firm Riskified, and hired a former FBI agent. The company also appointed Warren Jenson, a former Amazon finance chief, as its first chief financial officer.
Despite those operational upgrades, regulatory and legal pressures continue to mount. The CFTC opened an investigation into the platform. At the same time, New York City officials launched a probe into prediction-market marketing practices.
Technical Vulnerabilities and the Stakes for a $21 Billion Valuation
The controversies arrive as Polymarket pursues a new funding round targeting a valuation of about $21 billion. Intercontinental Exchange holds a roughly 22% stake in the company valued at about $1.6 billion, tying major institutional interests to the platform’s ability to mature its compliance framework before regulators or fraudsters force tighter restrictions.
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