South Korea prosecutes 18 people for using Polymarket to place bets totaling 17 billion won
According to data from the Korean National Police Agency, cases have been filed against 26 domestic Polymarket users on suspicion of illegal gambling, and 18 of them have been handed over to the prosecution.
9/18/20264 min read
The primary investigative method is storytelling.
The most crucial detail in the case wasn't specifically related to the prediction market. The police couldn't obtain a list of users because no such list existed, so they reconstructed the identities from the public ledger.
Polymarket automatically settles transactions between users and does not hold customer funds. There is no account database mapping wallet addresses to South Korean citizens, no KYC records to summon, and no business entity holding the records that a routine investigation would require. The anonymity that the DeFi architecture provides has worked exactly as designed.
It doesn't prevent identification. Investigators applied OSINT methods to on-chain transaction records and linked wallet activity to each individual, then profiled the case. Every transaction those users made was permanently recorded and publicly traceable, which is what makes blockchain payments verifiable and legally sustainable in a way no conventional financial record can.
The practical lesson extends beyond Polymarket. A user in any jurisdiction interacting with a non-custodial protocol prohibited by their domestic law did not escape enforcement by avoiding an intermediary. They created a public, permanent, time-stamped record of that behavior that law enforcement could review at any time, years later, without the cooperation of anyone.
Legal disputes
Police argued that these transactions met Article 246 of the Korean Criminal Code, which defines gambling in which assets are wagered on uncertain outcomes that participants cannot control. Investigators cited Supreme Court precedent that wagering assets on uncertain outcomes constitutes gambling regardless of the player's skill, including a 2008 ruling concerning the role of an intermediary.
The penalty under this provision is up to 10 million won for gambling offenses, while routine gambling offenses can carry a prison sentence of up to three years or a fine of up to 20 million won, equivalent to approximately US$14,000. The current text takes effect on September 13, 2026. The distinction between routine gambling and gambling offenses can be significant, considering the total amount wagered by an individual reached 5.7 billion won, making it difficult to consider this a single offense.
Users offered a different interpretation. They argued that Polymarket operates as a cryptocurrency-based derivatives market rather than a gambling venue, based on two structural characteristics: contracts are traded on the order book rather than against a market maker, and positions can be closed before expiration instead of requiring holders to wait for the outcome.
These are not minor differences. A position that can be sold at a market-determined price before being settled economically functions more like a tradable instrument than a bet, and the order book means users trade with each other, not with an operator who has a structural advantage. Whether Korean courts find that argument convincing, contrary to the clear language of Article 246, is a question the prosecution will address.
Blocking access before prosecution.
The Korea Communications Standards Commission voted in mid-August to block domestic access to Polymarket, and access was cut off on August 18. The commission determined the platform provided an illegal gambling environment, citing its "winner takes all" payout structure as encouraging speculative gambling.
The committee's reasoning focused on Polymarket's operational role rather than solely on user behavior, pointing out that the platform operates markets, sets trading rules, provides cryptocurrency deposit, withdrawal, and payment services, and collects transaction fees.
Polymarket argued regarding legal jurisdiction. They claimed that they did not provide services in Korean, did not support payments in South Korean won, and that non-custodial transactions and smart contract payments meant they were not directly operating a gambling business in South Korea. The Commission rejected that position.
The sequence of events is noteworthy: Gangwon's investigation began in May with a preliminary investigation ordered in March, months before the access blocking took place in August. The prosecution of users was not a consequence of the blocking decision. Both stemmed from the same basic conclusion that the activity violated South Korean gambling laws, with the platform blocking and user prosecution occurring simultaneously, targeting two opposing sides of the same transaction.
Assessment and Conclusion
The transfer of files does not equate to prosecution. South Korean prosecutors are currently reviewing 18 cases and deciding whether to file formal charges, and the police documents do not indicate their intentions or timeline.
This decision carries weight beyond these individuals. An indictment would demonstrate that the South Korean authorities are willing to criminally prosecute individual users of decentralized platforms overseas, a significantly more aggressive stance than simply blocking access. Failure to prosecute, or only pursuing those holding the largest stakes, would suggest that blocking is the primary enforcement target and that user investigations are primarily aimed at identifying individuals. Either outcome sends a clear signal to South Korean users of any blocked or unlicensed cryptocurrency platform. The use of aliases is real, and it has proven ineffective.
Disclaimer: The content in this article is for informational, research, data analysis, and reference purposes only regarding the cryptocurrency market. All opinions, assessments, forecasts, or opinions reflect the author's perspective at the time of publication and do not constitute investment advice, solicitations for buying or selling, trading recommendations, advertising, marketing, or promotion of any financial products, services, or cryptocurrencies. Mentions of projects, tokens, protocols, exchanges, wallets, or cryptocurrency service providers (CASPs) are for research, analysis, or informational purposes only and should not be construed as endorsements, recommendations, or guarantees in any way. HCCVenture does not broker, advertise, market, promote, or connect users in Vietnam with any cryptocurrency services from CASPs. HCCVenture does not accept asset custody, investment mandates, manage assets, or execute transactions on behalf of clients. All investment decisions are made entirely through the reader's own research (DYOR), evaluation, and responsibility; HCCVenture is not liable for any losses or damages arising from the use of or reliance on the information presented in this article.
Compiled and analyzed by HCCVenture
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