South Korean police have referred 18 Polymarket users to prosecutors in an expanding illegal gambling investigation that has so far placed 26 people under scrutiny for wagering roughly 17.6 billion won, equivalent to about 12.7 million USD, on the prediction market platform.
The referral, first reported by Asia Economy, marks the most aggressive enforcement step yet in a case that began in June, when the Gangwon Provincial Police Agency opened the country’s first illegal gambling probe into local Polymarket users at the request of the National Police Agency. According to data submitted by the National Police Agency to the office of Democratic Party lawmaker Yoon Kun-young, 18 of the 26 individuals under investigation have now been handed over to prosecutors as of Tuesday.
The scale of the alleged activity is striking for a market that South Korean regulators insist does not legally exist in the country. The largest single wager identified by investigators totaled approximately 5.7 billion won, or about 4.1 million USD, staked by one user across Polymarket’s event-driven contracts.
## Blockchain analysis unmasked pseudonymous traders
Perhaps the most consequential detail for the broader crypto sector is how police identified the users in the first place. According to the report, investigators unmasked pseudonymous traders by analyzing publicly available blockchain transactions, linking onchain activity to real-world identities without any cooperation from the platform itself.
Polymarket operates on a noncustodial, peer-to-peer structure with automated settlement through smart contracts. It does not maintain a conventional list of users by their real names, a design choice that its defenders have long argued places it outside the reach of conventional platform regulation. The Korean investigation demonstrates that pseudonymity at the platform level does not necessarily translate into anonymity at the blockchain level, where persistent public records can be pieced together with offchain data.
Authorities reportedly concluded that Polymarket transactions constitute illegal gambling under South Korea’s Criminal Act because users stake assets on outcomes that cannot be predicted with certainty. The users under investigation pushed back, arguing that Polymarket should instead be treated as a crypto-based derivatives investment market rather than a gambling venue.
## Blockade followed August regulatory ruling
The criminal referrals build on a decision by South Korea’s media and communications review commission on Aug. 18 to block Polymarket inside the country. The commission determined that the prediction market provided an illegal gambling environment, citing its winner-takes-all structure as encouraging speculative gambling.
In its ruling, the commission pointed to Polymarket’s role in operating markets, setting trading rules, providing crypto deposits, withdrawals and settlement, and collecting transaction fees as evidence that the platform functions as a gambling service rather than a neutral technology provider.
Polymarket mounted a defense rooted in its technical architecture. The platform argued that it does not provide Korean-language services, does not support payments in Korean won, and that its noncustodial transactions and use of smart contracts mean it does not directly manage user funds. The commission rejected the argument outright, stating that technical characteristics do not exempt a service from the application of South Korean law.
Legal experts suggest the users face an uphill battle in court. Tae-Lim Kim, managing attorney at AXIS Law, told Asia Economy that the transactions could meet the statutory requirements for gambling. While describing them as prediction derivatives could frame the debate, he said that framing would be difficult to deploy as a direct defense in criminal proceedings, although the ability to trade contracts and exit positions before settlement could influence a court’s ultimate assessment.
## Global pressure on prediction markets intensifies
The South Korean crackdown is unfolding alongside mounting regulatory friction for prediction markets in other jurisdictions. In the United States, the Commodity Futures Trading Commission has been locked in disputes over how to interpret prediction market authority, including litigation that has exposed a circuit split over whether event contracts amount to regulated derivatives or impermissible gambling.
For Polymarket specifically, the Korean case establishes an uncomfortable precedent: jurisdictions that classify outcome-based contracts as gambling can pursue individual users, not just the platform, and can do so using the very blockchain transparency that crypto advocates celebrate as a core feature of the technology.
The 18 referred users now await prosecutorial decisions on whether formal indictments will follow. If prosecutors proceed and courts uphold the gambling interpretation, the case could set a binding template for how South Korea treats peer-to-peer prediction markets operating outside its licensing perimeter, and it signals to users elsewhere that betting through noncustodial infrastructure offers far less legal insulation than its architecture might suggest.
The investigation also complicates Polymarket’s global expansion ambitions. The platform has pushed into new markets and product lines over the past year, including leveraged perpetual-style contracts, even as regulators from Seoul to Washington debate whether its core product is a financial instrument or a bookmaker’s ledger. South Korea’s answer, delivered through criminal referrals rather than civil penalties, is now the harshest yet.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
4.1 million dollars on a single polymarket bet while living in a country where the platform officially doesnt exist. wild risk appetite
right, and they traced it all onchain. pseudonymity did absolutely nothing for these 18 guys
4.1 million on a single account is a rounding error on polymarket, election nights did billions globally. in seoul it apparently makes you a headline and a criminal referral
the june Gangwon probe turning into actual prosecutions this fast is a signal. 18 of the 26 already referred to prosecutors
The speed is the message. June probe to prosecutions in one summer while other countries still argue about what a prediction market even is
one summer from probe to referral while the US still cant decide if polymarket is legal anywhere. korea doesnt mess around
the numbers came from a lawmaker requesting police data, Yoon Kun-young office. so this was always heading somewhere public, the 18 probably knew before the reporters did
18 referred out of 26 and the biggest wallet did 5.7 billion won on polymarket. imagine getting unmasked by your own public tx history
4.1 million usd on a single account across event contracts. calling that gambling feels like an undersell
right, one wallet did 5.7 billion won total. at that size youre basically a market maker pretending its a casino
4.1 mil on a single account lol. at some point its not gambling anymore, its an unlicensed bookie with extra steps
unlicensed bookie with extra steps is exactly it lol. the fees went to a dao treasury instead of a kangwon landlord, same appetite different paperwork
The part that worries me is they linked identities purely from public blockchain data. Zero cooperation from Polymarket needed.
public tx history plus exchange KYC from the Gangwon probe would be my guess. chain analysis alone rarely gets you a home address in seoul
yep, onchain data alone gives you a wallet. the withdrawal into a korean bank account is what puts an actual name on the summons
chain analysis plus a domestic exchange withdrawal address is all it takes. those 18 hopped from a KYC exchange to polymarket and back, that bridge burns you every time
the KYC hop is unfixable from the user side too. privacy tools exist and still nobody on polymarket uses them, they just gamble in broad daylight
also the 12.7 mil figure is just what they traced. anyone who cashed out through a foreign bank is watching this case to see if wallet clustering alone holds up in court
the 12.7 mil is only what they could trace end to end. bet anything there are users who stayed under the reporting thresholds on purpose and they will never be in these numbers
wallet clustering holding up in a korean court would set a nasty precedent for every defi user in the country, not just these 18
exactly this. every noncustodial means anonymous argument just died in a seoul courtroom. the chain remembers everything
zero cooperation needed because every one of them cashed out through a korean exchange. the KYC bridge did the unmasking
the KYC bridge exactly. deposits went through domestic exchanges with real names attached, chain analysis just connected the two ends of the same person
18 referrals and a freeze on 12.7 mil. meanwhile the local options apps charge worse odds than polymarket ever did, regulation protecting the house as usual
5.7 billion won from one wallet while the platform officially doesnt exist in the country. thats commitment to illegal prediction markets
26 under investigation, 18 referred, and the biggest account is 5.7 billion won. korea treating prediction markets like organized gambling while the US hands polymarket super bowl ads, wild divergence