WASHINGTON, D.C.—Dennis Kelleher, President and CEO of Better Markets, issued the following statement in connection with Better Markets’ filing of a Freedom of Information Act (“FOIA”) request with the Commodity Futures Trading Commission (“CFTC”):
“In a highly suspicious sequence of events, the CFTC approved a license for ‘QCX LLC’ after three years of inaction but just days before Polymarket announced an agreement to purchase QCX and only shortly after the CFTC and the Department of Justice (DOJ) dropped seemingly very serious investigations into Polymarket without explanation. That will likely enable Polymarket to unleash its previously prohibited gambling activities in the U.S., using a backdoor loophole that was a key strategy of FTX and Sam Bankman-Fried (SBF) before its bankruptcy and his criminal conviction.
“Because there was no opportunity for public input and virtually no transparency into the actions of the CFTC, QCX, and Polymarket, the public is in the dark as to what happened here and why, including whether the CFTC and others followed the proper legal and ethical procedures. Better Markets filed a FOIA request so that the public can be informed regarding these key issues, including those related to the use of derivative ‘event contracts’ for widespread and unregulated gambling. The CFTC’s decision on July 9 to approve QCX resulted from a flawed and opaque process that will result in a new wave of gambling contracts tied to elections, sports contests, and other events. It will hurt countless Americans increasingly vulnerable to such trading platforms, which often employ sophisticated hyper-targeted AI and gamification features to prey on unsuspecting Americans. The public record so far leaves too many questions unanswered, and that’s why Better Markets is seeking these records.
“Importantly, Polymarket itself isn’t registered with the CFTC, but it will likely use now-CFTC registered QCX LLC as a conduit for offering innumerable gambling opportunities across the U.S. However, a number of these contracts are likely to be illegal under the CFTC’s own rules since it appears they will involve gaming and activity that is illegal under state law. In fact, such gaming contracts were never intended to be traded in the legitimate derivatives markets because they serve no legitimate risk-hedging function. And the whole process was fundamentally flawed since it allowed Polymarket to indirectly gain de facto designation status without subjecting itself to the regulatory scrutiny that normally comes with such an application, as we explained in our recent submission to the CFTC.
“These are grave and consequential matters and the public has a right to know what the CFTC did, why it did it, who was involved, and whether there were any legal or ethical violations related in any way to the highly suspicious process, sequence, and timing of events here. We look forward to the CFTC’s prompt and full disclosure, which Better Markets will use to inform the public of these matters.”
###
Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
