Catenaa, Wednesday, July 08, 2026- Two traders have filed a lawsuit against prediction market platform Polymarket, accusing the company of breaching its own rules and misleading users after resolving a market tied to whether Strategy sold any of its Bitcoin holdings before the end of May.
The complaint, filed July 3 in the New York Supreme Court, names Polymarket, Chief Executive Officer Shayne Coplan, Chief Marketing Officer Matthew Modabber and related entities as defendants. Plaintiffs William Wood and Thomas Bush claim they purchased “Yes” shares in a binary market asking whether Strategy would sell any Bitcoin by May 31.
The dispute centers on Strategy’s disclosure in a Form 8-K filed with the US Securities and Exchange Commission on June 1. The filing revealed the company sold 32 Bitcoin between May 26 and May 31, marking its first Bitcoin sale since December 2022.
According to the lawsuit, the market should have resolved in favor of “Yes” because the transactions occurred before the stated deadline. Instead, Polymarket resolved the market as “No” after adding clarifying language stating that confirmation obtained after the market’s closing period would not qualify for resolution.
The plaintiffs argue the additional interpretation fundamentally changed the original terms of the contract after the event had already occurred. They contend the market’s published rules identified official information released by Strategy as the primary resolution source and did not require public confirmation before the deadline.
The lawsuit alleges breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, deceptive business practices and false advertising under New York law. The traders are seeking damages, including redemption of their winning shares at face value, along with legal costs.
The controversy follows widespread criticism from Polymarket users who argued the platform mishandled the resolution process. Several traders publicly challenged the decision after the market initially resolved to “No” twice before entering a final review stage.
One trader claimed to have lost approximately $500,000 after continuing to purchase “Yes” shares on June 1 because the market remained open despite the alleged requirement for confirmation before May 31. Another participant argued the market was clearly designed to measure whether the Bitcoin sale occurred, not when it became publicly known.
The dispute ultimately proceeded through Polymarket’s contested market process, where holders of the UMA governance token voted to resolve the market as “No” on June 3.
Polymarket has not publicly responded to either the lawsuit or the allegations outlined in the court filing. The company also has not commented on criticism from traders regarding the rule clarification.
The legal challenge arrives as Polymarket continues posting record trading activity. According to data compiled by The Block, the platform recorded an all-time high monthly trading volume of $10.7 billion in June, while its US-focused platform generated an additional $3.25 billion.
Polymarket operates blockchain-based prediction markets where traders buy shares representing the likelihood of future events. Most disputed markets are settled through UMA’s decentralized oracle system, where token holders vote on the correct outcome. While the model aims to create transparent, community-driven resolutions, critics have argued that governance voting can introduce subjectivity in markets with ambiguous wording. The Strategy dispute has become one of the platform’s most closely watched controversies because it raises broader questions about market integrity, rule consistency and the legal enforceability of decentralized prediction market outcomes as institutional participation in the sector continues to expand.
