The plaintiffs accuse the prediction market platform of retroactively changing the rules. We break down what they’re demanding.
Two traders, William Wood and Thomas Bush, have filed a lawsuit against Polymarket in the New York State Supreme Court. They accuse the platform of breach of contract and misrepresentation in resolving a market on Strategy’s May 2026 bitcoin sale. The plaintiffs claim Polymarket changed the rules after trading closed, turning their winning “yes” tokens into losing ones.
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One plaintiff previously said he lost $500,000 on the bet. Defendants include Polymarket CEO Shayne Coplan and marketing director Matthew Modabber.
Contents
The Dispute: Strategy’s Bitcoin Sale and Polymarket’s Resolution
The market asked whether Strategy would sell any of its bitcoin before May 31, 2026. In a June 1 SEC filing, Strategy confirmed it had sold 32 BTC between May 26 and May 31. But Polymarket resolved the market as “no,” adding a clarification:
“Confirmation received outside the market’s time frame is not counted.”
The plaintiffs argue that Strategy’s SEC filing is “clear proof of the sale occurring in May” and that the platform retroactively imposed a requirement for public confirmation before the deadline. They are pressing claims on several grounds:
- Breach of contract
- Breach of implied covenant of good faith and fair dealing
- Unjust enrichment
- Violation of New York General Business Law for misrepresentation and false advertising
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The plaintiffs seek damages, including the redemption value of their winning “yes” tokens at $1 per share, plus legal costs.
The lawsuit states:
“If defendants can retroactively impose a timely confirmation requirement on such an objective market, then the promise of a predetermined, rules-based dispute resolution is misleading. A prediction market that refuses to acknowledge a proven, unambiguous event is not seeking truth; it is controlling payouts.”
On June 3, the final resolution of “no” came after a UMA governance vote, the mechanism used to resolve disputed outcomes.
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Crypto Industry Reaction and Polymarket’s Previous Scandals
The “no” resolution angered many traders. Social media campaigns with #PolyScam hashtags called for a class-action lawsuit. Major investment firm Galaxy Digital publicly expressed confusion, disclosing that it held “yes” tokens on the bet.
This isn’t Polymarket’s first scandal in recent months. In June, the Wall Street Journal reported that the platform paid content creators to film fake bets on lookalike sites. Earlier, Senators John Curtis and Adam Schiff asked the CFTC to investigate Polymarket’s marketing practices, concerned the platform was misleading Americans about the legality of such bets.
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