Two traders have sued Polymarket, alleging the prediction market platform improperly settled a Bitcoin-related contract after Strategy disclosed a Bitcoin sale that they argue met the terms of the bet.
The lawsuit, filed in the Supreme Court of the State of New York, claims Polymarket resolved the market as “No” even though Strategy’s regulatory filing confirmed that the company sold Bitcoin before the contract deadline. The plaintiffs argue the platform introduced a public-confirmation requirement after the event had already occurred, causing their “Yes” positions to become worthless.
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The traders are seeking at least $797,198 in damages, along with additional penalties and court orders preventing Polymarket from changing settlement rules after outcomes are known.
Traders Challenge Polymarket’s Settlement Decision
The dispute centers on a Polymarket contract asking whether Strategy, the largest corporate Bitcoin holder, would sell any Bitcoin by 11:59 p.m. ET on May 31, 2026.
According to the complaint, the market’s resolution rules identified information from Strategy, and on-chain data as primary sources for determining the outcome.
Strategy later disclosed in a Form 8-K filing with the U.S. Securities and Exchange Commission (SEC) that it sold 32 BTC between May 26 and May 31 for approximately $2.5 million.
The plaintiffs argue that the sale itself satisfied the market conditions. They claim Polymarket later added clarifying language requiring public confirmation within the market’s timeframe, which changed how the outcome was determined.
Polymarket ultimately finalized the market as “No” on June 3 after a dispute process involving UMA’s Optimistic Oracle system.
Traders Say Rule Change Cost Them Hundreds of Thousands
The lawsuit was filed by William Wood and Thomas Bush, who held a combined position of nearly 797,000 “Yes” shares before the market was resolved.
According to the complaint, Wood held about 695,704 “Yes” shares purchased for roughly $530,023, while Bush held about 101,494 shares purchased for approximately $66,258.
The plaintiffs argue that thousands of traders were affected by the ruling. They cite an on-chain snapshot showing that around 1,868 users held “Yes” shares before the settlement decision, with potential losses estimated at about $3.8 million compared with the value those positions would have had under their interpretation of the rules.
A Test for Prediction Market Rules
The lawsuit names Polymarket operators Adventure One QSS and Blockratize, along with CEO Shayne Coplan and CMO Matthew Modabber. The complaint includes claims of breach of contract, breach of the implied covenant of good faith, unjust enrichment, and alleged violations of New York consumer protection laws.
At the center of the case is a broader question facing prediction markets: whether platforms can adjust the interpretation of settlement rules after a real-world event has already taken place.
As prediction markets expand into finance, politics and corporate forecasting, the dispute could become a test of whether users can rely on predefined rules when placing bets on future events.
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