Taiwan Investigates Blockchain Wagers on Polymarket Election: Report

• Taiwanese Law Enforcement Investigates Election Betting on Polymarket
• Over $300,000 Bet on Election Outcome
• Taiwan's Stance on Election Betting
• Strict Vigilance by Law Enforcement
• US Perspective and Polymarket's Terms of Use
• Jurisdictional Challenges for Taiwan
• Decentralized Nature of Polymarket
• Taiwan's Legal Precedent
• Polymarket CEO's Response

Taiwanese Law Enforcement Investigates Election Betting on Polymarket

As Taiwan's election draws near, local authorities are investigating instances of online influencers and community members advocating for a Polymarket contract related to the election. BlockTempo, a Taiwan-based news outlet, has cited that multiple crypto community influencers and individuals have been summoned for their involvement in the Polymarket contracts that allow users to wager on the election's outcome.

Over $300,000 Bet on Election Outcome

At present, the betting contract related to the election outcome has attracted over $300,000 in bets. Predictions in the market favor the Democratic Progressive Party's Lai Ching-te, also known William Lai, giving him a 78% chance of winning.

Taiwan's Stance on Election Betting

Engaging in gambling on election outcomes is strictly forbidden under Taiwan's Presidential and Vice Presidential Election and Recall Act, Article 88. The law states, A person who gambles in a public place or a place open to the public on the outcome of an election or recall shall be sentenced to fixed-term imprisonment of not more than six months, short-term detention or a fine of not more than NT$100,000 ($3,196.85).

Strict Vigilance by Law Enforcement

Sherman Lin, an attorney in Taipei, emphasizes the vigilance of Taiwanese law enforcement in investigating any form of gambling related to presidential elections. Broad legal interpretations have been applied to gambling crimes under the Presidential Election and Recall Act, leading to investigations and convictions of gambling website operators in Taiwan targeting Taiwanese gamblers, he said.

US Perspective and Polymarket's Terms of Use

In contrast, in the US, most states, including Nevada, consider betting on election outcomes to be against the law, with primary enforcement by the Commodity Futures Trading Commission (CFTC). Polymarket's Terms of Use explicitly state that its utility is prohibited by U.S. persons. Meanwhile, Prediction market KalshiEX has filed a lawsuit against the CFTC for its prohibition of proposed derivatives contracts for congressional control betting, stating that these contracts are legal and beneficial for public interest as they allow risk mitigation and predictive data.

Jurisdictional Challenges for Taiwan

While Taiwanese authorities pursue legal measures against gambling activities, including participation in, promotion of, and hosting platforms like Polymarket, the execution of these measures against entities abroad presents jurisdiction challenges. The jurisdictional limitations restrict Taiwan's legal power mostly to domestic actors, as explained by Lin.

Decentralized Nature of Polymarket

Lin further explained, Given Polymarket's decentralized nature and lack of physical presence in Taiwan, the Taiwanese judicial system's reach over Polymarket might be limited. He also mentioned that law enforcement would likely target online influencers who publicized the contract. He indicated that there have been recent instances where Taiwanese prosecutors pursued online influencers who were involved in promoting trading platforms, suggesting that even promotional activities could lead to legal consequences. For instance, when the unlicensed crypto exchange JPEX fell through in Hong Kong, local law enforcement arrested various online influencers who had promoted the platform.

Taiwan's Legal Precedent

While there is sufficient legal precedent in Taiwan to prosecute centralized entities organizing election gambling, Lin noted that there is no established legal precedent in Taiwan for decentralized platforms organizing election betting.

Polymarket CEO's Response

Polymarket CEO Shayne Coplan has not provided any comments on the issue.

Edited by Jonathan Stoker