South Korean police have referred 18 Polymarket users to prosecutors on suspicion of illegal gambling, in an investigation that began months before the country ordered the prediction market blocked in August.
The cyber investigation unit of the Gangwon Provincial Police Agency has booked 26 users since May and referred 18 of them as of Sept. 15, according to National Police Agency material submitted to Rep. Yoon Kun-young of the Democratic Party and reported Thursday by Asia Economy. The 26 staked crypto worth about 17.6 billion won, roughly $12.8 million at Thursday’s exchange rate, and one of them staked about 5.7 billion won alone, roughly $4.2 million, the highest individual figure in the police data. A preliminary inquiry was ordered in March. Referral hands a case to prosecutors, who decide whether to indict; the police material reports no indictments.
Found on the Blockchain
Polymarket settles trades between users automatically and does not hold customer funds, and police determined it keeps no list of Korean users to request. Obtaining one from the operator is not realistic, investigators said, so they are identifying users from the public record of blockchain transactions, using open-source intelligence techniques. The investigation is still open, so the numbers could grow.
Gambling or Derivatives
Police treat the trades as gambling under Article 246 of the Criminal Act, which covers staking property on an uncertain outcome. They pointed to Supreme Court precedent holding that gambling can be established where chance plays a part even when a participant’s skill affects the result, and said resemblance to derivatives trading, or the absence of separate guidance, does not by itself rule the offense out. Whether charges apply is judged on the content and method of each transaction together with the relevant statutes, they said.
The booked users’ position, as reported, is that Polymarket is a crypto-based derivatives market rather than simple gambling, because they price an event’s likelihood from public information and can sell before it resolves.
Kim Tae-rim, managing attorney at AXIS Law, told Asia Economy that staking crypto on an uncertain outcome can formally satisfy the statute’s property and chance elements, and that Korean criminal law is hard to escape because it follows the nationality of the accused. The key issue, he said, is how a court will weigh the fact that users trade probability contracts on an order book and can close them before expiry, a structure that differs from traditional gambling.
No Korean court has decided the question. South Korea’s broadcasting and communications standards regulator ordered domestic access cut off on Aug. 18, rejecting Polymarket’s argument that it takes no won, offers no Korean-language service and settles non-custodially between users. That was an administrative decision, and Gangwon Ilbo framed the referrals as a test case for what would be the first judicial ruling on whether using the platform is gambling.
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