Polymarket Hit With Lawsuit Over Bitcoin Prediction Market

Polymarket is facing a new lawsuit in New York after two users accused the prediction market platform of wrongly settling a Bitcoin related contract and denying payouts on winning positions.

The lawsuit centres on a market asking whether Strategy (formerly MicroStrategy) would sell any of its Bitcoin by 31 May 2026. The plaintiffs claim the company did sell Bitcoin within the required timeframe, but that Polymarket later changed how the market would be interpreted before resolving it as "No."

The complaint names Polymarket, CEO Shayne Coplan, CMO Matthew Modabber, and several unnamed defendants.

Users Challenge Market Outcome

According to the lawsuit, plaintiffs William Wood and Thomas Bush correctly predicted that Strategy would sell Bitcoin before the deadline. Their argument is based on a 1 June SEC filing, which disclosed that Strategy sold 32 Bitcoin between 26 May and 31 May. The plaintiffs say this confirmed the event had occurred within the market's timeframe and that the contract should have settled in favour of "Yes" bettors.

Instead, Polymarket resolved the market as "No." The lawsuit claims the platform later added clarification stating there had been no public confirmation of the sale before the deadline, meaning information released after the market closed would not count toward the outcome. The plaintiffs are saying that this changed how the contract was interpreted after the event had already taken place.

Questions Raised Over Market Resolution

The lawsuit also challenges the role of UMA's Optimistic Oracle, the decentralised system used to settle challenged markets on Polymarket. While UMA ultimately finalised the result, the plaintiffs argue that Polymarket controlled the wording of the contract, issued additional guidance during the process and influenced the information submitted for resolution.

The complaint includes claims for breach of contract, unjust enrichment and misleading business practices under New York law. The plaintiffs are seeking damages, repayment of the denied winnings, legal costs and court orders preventing similar situations in the future.

Market Had Already Drawn Criticism

The disputed contract had already attracted significant attention before the lawsuit was filed. Following Strategy's SEC filing, many traders questioned why the market was still expected to resolve as "No", arguing the sale itself had occurred before the deadline even if it was disclosed later. Others supported Polymarket's position that confirmation needed to be available within the market's timeframe. 

The disagreement quickly became one of the platform's most talked about market resolutions and led to wider discussion about how prediction markets handle complex outcomes.

Resolution Process Comes Under the Spotlight

The lawsuit arrives at a time when prediction markets are attracting more users and greater regulatory attention around the world. As trading volumes continue to grow, confidence in how markets are settled is becoming increasingly important for both operators and participants.

For Polymarket, the case is not only about one Bitcoin contract. It also puts the platform's market resolution process under closer examination as it continues to expand. The outcome of the lawsuit could influence how prediction market operators write contract rules, issue clarifications and settle contested markets in the future.

Stay tuned to UMG Gaming for more updates on prediction markets, legal developments, and the latest stories shaping the future of event-based trading.