Two users have sued the prediction market platform Polymarket in a New York state court, alleging that the platform wrongfully denied payouts on winning positions in a market related to Strategy’s Bitcoin sales. The complaint states that Strategy’s filings with the U.S. Securities and Exchange Commission disclosed that the company sold 32 Bitcoin during the reporting period ending May 31, 2026, yet the market was ultimately settled as “No.”
Disputes revolve around settlement criteria
Plaintiffs William Wood and Thomas Bush stated that the issue with the market was whether Strategy (formerly MicroStrategy) would sell any Bitcoin before May 31, 2026. The complaint noted that the market originally designated Strategy’s SEC filings as the primary source for settlement, meaning that any sale disclosed in the company’s Form 8-K would be sufficient to support a "yes" outcome.
However, the plaintiff stated that Polymarket subsequently added additional clarifications, effectively changing the question from “whether a sale occurred” to “whether a sale was publicly confirmed before the deadline.” Under this interpretation, the platform ultimately settled the market as “No” and refused to pay out users holding “Yes” shares.
The plaintiff claims the platform changed its rules after the fact.
The complaint argues that the dispute does not arise from ambiguity of facts, but from the settlement criteria being altered after the outcome occurred. The plaintiffs state that what should truly be determined is whether the sale itself took place, and that SEC documents are merely evidence of the event, not a substitute for determining when the event occurred.
The plaintiff also argued that if the platform could adjust its interpretation after the outcome was clear, it would undermine its stated market mechanism of operating under fixed rules. The lawsuit therefore brings multiple claims, including breach of contract, unjust enrichment, misleading commercial practices, and false advertising, and seeks damages, attorney’s fees, interest, and injunctive relief.
The lawsuit also names executives and affiliated companies.
The lawsuit was filed on July 3 in the New York State Supreme Court. The defendants include Adventure One QSS Inc., Blockratize Inc., Polymarket founder Shayne Coplan, Chief Marketing Officer Matthew Modabber, and other unnamed defendants.
The complaint also states that although Polymarket uses UMA’s Optimistic Oracle for contract settlement, the drafting of market rules, the release of supplementary clarifications, page management, and the formulation of questions remain under the platform’s control. The plaintiff argues that, therefore, the platform cannot fully attribute disputes to the oracle process.
Additional information: The report noted that Polymarket has recently faced increased regulatory scrutiny. Bloomberg previously reported that the U.S. Commodity Futures Trading Commission is investigating several aspects of the company’s operations, including its social media activities.