Key Points
- The Gangwon Provincial Police booked 26 Polymarket members and referred 18 more to prosecution, involving wagers worth 17.6 billion won.
- Police traced users through public blockchain transaction records and OSINT, without accessing any real-name user database from Polymarket.
- Users argue Polymarket operates as a crypto derivatives market, not a gambling platform, a legal distinction courts have not yet ruled on in South Korea.
There have been twenty-six arrests made in South Korea with regard to their utilisation of Polymarket, out of which eighteen cases have been passed on to the prosecutors. This does not seem like a very serious number until you go to the data beneath.
As reported to Assemblyman Yun Kyeon-Young’s office by the National Police Agency and the Gangwon Provincial Police Agency, as of 15 September, the total cumulative wagers of the suspects had amounted to nearly 17.6 billion won or $12.7 million. The maximum cumulative wager by an individual user was reported to be about 5.7 billion won, which comes down to nearly $4.1 million.
In South Korea, state-authorised sports betting is allowed only through Sports Toto, which is a sports lottery run by the Korea Sports Promotion Foundation. Here, the upper limit on the total purchase amount in one session is 100,000 won.
How Police Found Them Without a Customer Database?
The reason why this case is notable is not only its scale, but its modus operandi. Polymarket operates as a decentralised and peer-to-peer exchange. No funds are held by the company, and there is no list of real-name customers. There is no account information for police to work with.
Instead, police tracked down the activity via publicly available transaction history of the blockchain, alongside open-source methods. Every Polymarket transaction is processed via the Polygon network utilising the USDC stablecoin, which means all transactions are public on-chain. The police matched wallet transactions to other available information in order to tie on-chain transactions to the individuals in South Korea.
National Police Agency provided the information directly to the office of an opposition lawmaker, meaning the investigation reached the stage when the evidence became strong enough to be made public. It is another matter whether the users expected their blockchain transactions to be tracked down this way; the bottom line is the information was available publicly, and the Gangwon cyber investigation unit knew how to work with it.
Gambling or Derivatives? The Legal Battle Ahead
The users booked in this case are not accepting the gambling classification. Their reported position, according to the Asia Business Daily, is that Polymarket functions as a virtual asset-based derivatives market. The platform’s order-book structure and the ability to exit positions before contract settlement are central to that argument.
Police are not persuaded. Their position is that the nature of the transaction, specifically, staking assets on uncertain outcomes, meets the requirements for a gambling offence under Article 246 of the Criminal Act regardless of how the platform labels itself. A key South Korean Supreme Court precedent holds that gambling charges can apply even when an individual’s skill plays some role in an outcome, provided that chance is also a factor and financial assets are at risk.
Tae-Lim Kim, Managing Attorney at AXIS Law, told the Asia Business Daily: “There is a possibility that Polymarket could be found to formally meet the requirements of property investment and chance under the Criminal Act, since users bet virtual assets and outcomes are determined by uncertain events, making it difficult to avoid the application of domestic criminal law under the principle of nationality.” He added that the core issue would be “how courts evaluate the structural differences, as the platform is order book-based, supports trading of probabilistic contracts, and allows liquidation before maturity.”
That distinction has not been tested in a South Korean court. There is no domestic precedent on Polymarket specifically. Both sides appear to understand this, which is why the legal outcome is genuinely open rather than predetermined by existing case law.
The Regulatory Timeline That Built to This Point
The probe that came to light in June was not a sudden development. It was officially reported by the Gangwon Provincial Police Agency on 5 June, after receiving a tip from the National Police Agency, only days after the South Korean local elections held on 3 June. Trading volume of the Seoul mayoral campaign on Polymarket had amounted to more than $52 million since its launch in November 2025.
By early July, the Korea Communications Standards Commission had initiated an official investigation against Polymarket, allowing the organisation a chance to give a formal reply before making a ruling. At the time, Polymarket insisted that it had withdrawn all Korean-language services, did not allow payments in Korean Won, and was based on non-custodial smart contracts. The KCSC rejected these points, saying, “technical characteristics or service structure cannot be the grounds to evade applicability of domestic law.”
Access to the platform was blocked on 18 August. Criminal referrals to prosecutors followed within weeks. The sequence moved faster than most regulatory actions involving novel technology and disputed jurisdiction.
South Korea Is Not Drawing This Line Alone
The global environment is important in establishing South Korea’s position with regard to Polymarket. The website ‘geographic restrictions’, last updated on 14 August 2026, indicates that there are 39 countries which have been banned, including Germany, France, Singapore, Brazil, Poland, Australia, and the United Kingdom. The French National Gambling Authority banned Polymarket on 16 July due to the addiction factor and lack of consumer protection required under national laws.
The South Korean case is distinctive not because of the block, but because of the shift from restricting a platform to pursuing individual users through the criminal system. Access restrictions are reversible; prosecutor referrals are not. The 18 individuals already referred now face a process that operates entirely outside Polymarket’s control or involvement.
Expert Analysis: The Question That Prediction Markets Have Not Answered
We find ourselves looking at a legal framework built for a world that did not have decentralised prediction markets, and watching regulators fit the new thing into the old categories with whatever tools they have.
South Korea’s approach is legally coherent, if not necessarily satisfying. Article 246 catches any activity where assets are staked on uncertain outcomes. The Supreme Court has already ruled that skill does not exclude gambling charges if chance is present. Polymarket’s order-book mechanics are interesting and genuinely different from a fixed-odds bet, but South Korean prosecutors are not obliged to treat that structural difference as decisive. The law does not require them to.
What we think the prediction-market industry underestimates is not the regulatory risk itself, which most platforms have priced in through geoblocking, but the reach of public blockchain data as an enforcement mechanism. The transparency argument, that open ledgers make markets honest, functions very differently when the authority reading the ledger is a national police agency rather than a market participant. Users who believed pseudonymity offered practical cover may now be reconsidering that assumption. The 26 booked in South Korea were not caught through a data breach or a whistleblower; they were identified through records that were always publicly visible.
Whether prediction markets belong in a derivatives regulatory framework or a gambling one is a legislative question, not a judicial one, and it will not be settled by these cases. But the enforcement signal South Korea has sent is clear: the block is not the endpoint.
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