Polymarket’s VPN crackdown puts prediction market ID controls under scrutiny

The online prediction betting company Polymarket is moving toward a more restrictive identity and access control model as legal and regulatory pressure builds around prediction markets, their use by prohibited traders, and the ability of users to evade geographic restrictions through VPNs.

The shift reportedly includes broader know-your-customer (KYC) checks, tighter enforcement against VPN use, and new efforts to identify users whose activity may raise compliance concerns.

The changes mark a significant turn for a platform that became known for relatively frictionless crypto-based trading, but which is now facing the same questions that have long followed online gambling, financial trading, and digital-asset platforms: who is using the service, where are they located, and are they legally permitted to participate?

The immediate issue is geoblocking. Polymarket is reportedly blocked or restricted in dozens of countries.

And this makes VPN detection a central compliance issue. A platform can say it does not allow access from restricted jurisdictions, but that policy is only as strong as its ability to detect users who mask their location.

VPN users may now face account suspension, while active traders may be subject to mandatory KYC checks.

The timing is important. A U.S. probe has put prediction market identity controls under the spotlight, with lawmakers seeking records on KYC procedures, insider-trading safeguards, and related compliance controls.

The inquiry is not only about whether prediction markets can prevent underage, sanctioned, or geographically prohibited users from trading.

It is also about whether these platforms have adequate systems to police market manipulation, misuse of confidential information, and other activities that would be unacceptable in more traditional regulated markets.

Polymarket’s regulatory history is part of that context. The Commodity Futures Trading Commission (CFTC) settled with Blockratize, Polymarket’s parent company, in 2022 for $1.4 million “for offering off-exchange event-based binary options contracts and failure to obtain designation as a designated contract market or registration as a swap execution facility.”

Polymarket also agreed to block U.S. users.

Since then, the company’s path back into the U.S. market has depended on a more formal regulatory footing. Its U.S. arm reportedly requires full KYC after Polymarket acquired a CFTC-licensed exchange in 2025.

That split illustrates the tension between Polymarket’s crypto-native origins and the compliance obligations that come with regulated access to U.S. users.

The issue also extends beyond Polymarket. Prediction markets have become more visible as traders use them to wager on elections, wars, court decisions, economic events, corporate outcomes, and political developments.

This growth has attracted users, investors, and media attention, but it has also invited scrutiny from regulators who view some markets as functionally similar to gambling, derivatives trading, or event contracts.

Multiple countries have blocked or restricted access to Polymarket over concerns about illegal gambling, increasing pressure on the company to show that its access controls are more than symbolic.

The insider trading concern is another major piece of the story. Publicly available legal analyses note that federal prosecutors and the CFTC have treated prediction markets as a venue where misuse of nonpublic information can trigger enforcement action.

The New York City-based law firm Debevoise & Plimpton described recent charges against Gannon Ken Van Dyke, an active-duty U.S. Army service member accused of using classified information to trade on Polymarket, as a warning that prediction markets are not an “insider trading safe zone.”

Van Dyke allegedly made more than $400,000 by placing prediction market bets based on classified information about the timing of a sensitive military or national security event.

The CFTC separately charged Van Dyke with insider trading on Polymarket, alleging that he used nonpublic classified information to profit from event contracts.

For users, the practical effect is that Polymarket may become less private and less pseudonymous. Traders who were able to participate with limited identity friction may now be asked to provide more personal information.

Users relying on VPNs may find themselves blocked, challenged, or suspended, and active traders may face more extensive verification than casual users.

The larger takeaway is that prediction markets are being pushed toward a compliance architecture that looks much more like financial services than the open, permissionless model associated with decentralized crypto platforms.

The industry’s future may depend less on whether these markets can attract attention and liquidity and more on whether they can satisfy regulators that they know who their users are, can keep prohibited users out, can detect circumvention, and can police misconduct once trading begins.

Article Topics

digital identity  |  fraud prevention  |  gambling  |  identity verification  |  KYC  |  regulation  |  VPN (virtual private network)