The Cyber Investigation Unit of the Gangwon Provincial Police Agency has initiated legal proceedings against users of the decentralized prediction market Polymarket. According to official data submitted to the office of lawmaker Yoon Kun-young, authorities have investigated 26 individuals, with 18 already referred to the prosecution. This move signals a tightening of oversight regarding decentralized finance (DeFi) platforms that offer services resembling prohibited gambling activities under South Korean jurisdiction.
Investigation into Decentralized Prediction Markets
The investigation, which concluded its initial phase on September 15, 2026, focuses on the participation of domestic citizens in international prediction platforms. While Polymarket operates globally using the Polygon blockchain and USDC stablecoins, South Korean law maintains strict regulations on betting and speculative activities. The Korean National Police Agency emphasized that the decentralized nature of these platforms does not grant immunity from local statutes.
- Individual cases involve significant capital flows, with some users investing substantial sums into political and sports-related event outcomes.
- The prosecution is evaluating whether these activities constitute habitual gambling or a violation of the Game Industry Promotion Act.
- Authorities are monitoring financial movements between local South Korean exchanges and external Web3 wallets to track participants.
Regulatory Implications for Crypto Users
Prediction markets allow participants to trade shares in the outcome of future events, but their legal status varies significantly across different global jurisdictions. In South Korea, the lack of a specific license for such platforms often leads to their classification as illegal gambling operations. The Referral to the prosecution suggests that the government intends to set a precedent for other DeFi and prediction-based protocols that lack local regulatory approval.
The Cyber Investigation Unit is committed to identifying unauthorized speculative platforms that bypass the domestic financial system, regardless of the underlying technology used.
The outcome of these cases is expected to have a profound impact on how South Korean investors interact with offshore decentralized applications (dApps). As the prosecution reviews the evidence against the 18 referred users, the crypto community is advised to remain aware of the legal boundaries concerning crypto-based betting. This enforcement action underscores the increasing capability of specialized police units to trace transactions across public ledgers to enforce national compliance.
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