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South Korean investigators didn’t need a subpoena to find Polymarket users — they just followed the blockchain. The Gangwon Provincial Police Agency’s Cyber Investigation Unit has booked 26 people connected to roughly 17.6 billion won ($12.7 million) in betting activity on the prediction market platform, using nothing more than publicly available transaction data to identify them.
How Police Cracked a “Non-Custodial” Platform
Polymarket‘s whole pitch is that it doesn’t operate like a traditional exchange — no central custody of funds, no conventional customer database tying real names to accounts. That structure is exactly what made regulators in places like Kentucky uneasy, but it turns out it’s not the shield users might assume.
Police used open-source intelligence techniques to comb through public blockchain records, effectively reverse-engineering identities from transaction patterns. The largest single bettor identified had wagered about 5.7 billion won. It’s a reminder that “anonymous” and “untraceable” aren’t the same thing when the ledger itself is public by design.
Gambling or Derivatives? The Legal Fight Ahead
At the heart of the case is a straightforward but consequential question: does putting crypto on the line for an uncertain outcome count as gambling under South Korean law? Police are leaning on Article 246 of the Criminal Act, arguing that Polymarket bets involve wagering property on events users can’t control or predict — plus a Supreme Court precedent on chance-based gambling.
The users pushing back have a different framing. They argue Polymarket functions more like a derivatives or prediction market, pointing to features like order-book trading and the ability to exit a position before an event actually resolves. Legal experts note this could genuinely matter in court, though there’s a catch: South Korea’s Capital Markets Act doesn’t currently recognize these contracts as derivatives, which limits how far that defense can go in a criminal proceeding.
Also Read: Polymarket Launches 20x Leverage Perps, Expanding Beyond Prediction Markets
Part of a Bigger Regulatory Crackdown
This isn’t happening in isolation. Back in August, South Korean regulators blocked domestic access to Polymarket entirely, ruling that its winner-takes-all structure created an illegal gambling environment. Polymarket tried arguing that its lack of Korean-won support, absence of Korean-language services, and peer-to-peer design should exempt it — regulators rejected that outright, saying technical architecture doesn’t override domestic law.
The access ban and the ongoing user investigation are technically separate issues: one asks whether the platform itself is illegal, the other asks whether individual bettors can be held criminally liable. Similar tension is playing out abroad too, with Kentucky’s attorney general suing both Kalshi and Polymarket this past June over comparable gambling classification concerns.
None of the 26 referrals have resulted in convictions, and no court has yet ruled on whether Polymarket’s contracts meet the legal definition of gambling. But the case is shaping up to be a genuine test of how blockchain-based prediction markets get treated when the assets are digital, the platform is decentralized, but the money at stake is very real.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
