Two users of the prediction market platform Polymarket have filed a lawsuit in New York, claiming that the company wrongfully altered its interpretation of a Strategy Bitcoin contract after the event had already taken place, leading to the denial of payouts for winning 'Yes' bets.
The lawsuit, initiated by plaintiffs William Wood and Thomas Bush, names Polymarket and its associated entities, including Adventure One QSS Inc. and Blockratize Inc., along with CEO Shayne Coplan and CMO Matthew Modabber, among others.
Filed on July 3 in the New York Supreme Court, the complaint emphasizes the fundamental purpose of prediction markets: to reward accurate forecasts. The plaintiffs argue that Polymarket failed to adhere to this principle when resolving the contested market.
Wood and Bush assert that they accurately predicted that Strategy Inc. (previously known as MicroStrategy) would sell Bitcoin by May 31, 2026, but Polymarket declared the outcome as 'No.'
In their allegations, the plaintiffs highlight that a Form 8-K filed by Strategy on June 1 revealed the sale of 32 Bitcoins during the period from May 26 to May 31, suggesting that the market should have resolved to 'Yes'. Instead, Polymarket opted for a 'No' resolution.
The complaint contends that Polymarket modified its interpretation of the market after the outcome was already known. The current market page includes a section stating that no credible evidence confirmed the sale of Bitcoin within the specified timeframe.
Furthermore, it claims that any confirmation obtained outside the market's timeframe does not count. The plaintiffs argue that the market only inquired whether Strategy sold Bitcoin before the deadline and that the SEC filing serves as valid proof.
The lawsuit asserts that this issue is not a matter of ambiguity but rather a clear-cut case. It argues that a prediction market that disregards a definitive event does not seek the truth but manipulates payouts.
Additionally, the complaint questions Polymarket's reliance on UMA’s Optimistic Oracle, which is used to resolve disputes. It alleges that Polymarket, rather than UMA, controlled the creation of market rules and the clarifications provided to users.
Wood and Bush are pursuing claims for breach of contract, unjust enrichment, deceptive business practices, and other violations under New York law, seeking damages, restitution, and other forms of relief for their denied 'Yes' positions.
Before filing the lawsuit, the plaintiffs publicly criticized the resolution of the disputed market, which had garnered significant backlash from users.