South Korea Sends 18 Polymarket Traders to Prosecutors Over KRW 17.6bn of Bets

Police data supplied to a National Assembly member show the Gangwon provincial cyber unit has booked 26 users of the blocked platform for gambling under Article 246 of the Criminal Act and referred 18 of them for prosecution. One trader alone put about KRW 5.7bn through the site. The defendants say a yes-or-no contract settled on a blockchain is a derivative, not a bet, and the courts have not yet been asked.

• The Gangwon Provincial Police Agency's cyber investigation unit has booked 26 South Korean users of Polymarket and referred 18 to prosecutors on gambling charges, according to National Police Agency data provided on 15 September to Democratic Party lawmaker Yoon Gun-young and reported by Asia Business Daily on Wednesday
• The 26 placed a combined KRW 17.6bn (about $12.7m) of trades on the platform; the largest single user accounted for roughly KRW 5.7bn (about $4.1m)
• Police treat trading on Polymarket as gambling under Article 246 of the Criminal Act, relying on Supreme Court precedent that staking property on an uncertain outcome is gambling even where skill plays a part, and say the substance of the transaction matters more than the label "investment"
• Because Polymarket is non-custodial and holds no user register, investigators identified the traders through on-chain transaction analysis and open-source intelligence; the Kangwon Ilbo reports the pre-investigation was ordered in March and bookings began in May
• The Korea Communications Standards Commission ordered access to Polymarket blocked on 18 August, citing a "winner-take-all" loss structure that encourages speculation; the platform's argument that it is non-custodial and offers no Korean-language service was rejected
• South Korea joins Denmark and Lithuania in blocking the site, and has gone further than either by pursuing the users rather than the platform

From Access Block to Criminal Referral

The numbers come from a written answer the National Police Agency gave to Yoon Gun-young, a Democratic Party member of the National Assembly, on 15 September, and were published by Asia Business Daily's Lim Chun-han on Wednesday. They show that a single provincial force, Gangwon, has carried the whole investigation. Its cyber investigation unit began a pre-investigation in March, started booking suspects in May and by mid-September had 26 people under investigation, 18 of whom have been referred to prosecutors with a request that they be charged.

The sums are not retail. The 26 traders put a combined KRW 17.6bn through the platform, and the biggest of them about KRW 5.7bn on their own, which is close to a third of the total. Polymarket, the police answer explains, is a virtual-asset platform on which users trade yes-or-no positions on political, social and economic events, receiving one USDC or one pUSD per share if they are right and losing their stake if they are wrong. Because the platform is peer-to-peer and non-custodial, it holds no customer file for police to seize. Investigators instead traced the traders through blockchain transaction analysis and open-source intelligence, which explains why an investigation that began in March has produced its first referrals only now.

The legal theory is straightforward. Article 246 of the Criminal Act punishes gambling, and the Supreme Court has held that staking property on an uncertain outcome is gambling even where the player's skill affects the result. The police position, as reported, is that the court should look at what actually happens in the transaction, money staked on an uncertain event with a gain or loss determined by the outcome, rather than at the words "investment" or "trading" the platform uses.

The traders reject that. Their defence is that a Polymarket position is a virtual-asset derivative, priced continuously on an order book and closable before settlement, and that this structure distinguishes it from a bet. Kim Tae-rim, a lawyer quoted by Asia Business Daily, said an order-book-based probability contract that can be liquidated before maturity "differs from traditional gambling structures" and that the courts will have to decide whether the difference matters. No court has yet ruled on the question in Korea.

The Regulator Moved First

The criminal cases follow an administrative one. On 18 August the Korea Communications Standards Commission ordered Polymarket's domain blocked, describing a loss structure in which the winning side takes everything as one that encourages speculation. Polymarket argued that it is non-custodial and offers no Korean-language service and so falls outside domestic law; the commission held that technical design is not a ground for exemption. The block puts South Korea alongside Denmark, where a Frederiksberg court order in August put Polymarket among 98 blocked sites, and Lithuania, whose regulator ordered ISPs to block it this week after its own staff placed sports bets on the site.

Korea Is Prosecuting the Demand Side

The jurisdictions that have moved against Polymarket so far have gone after the platform: a domain block, a cease-and-desist, a lawsuit. Korea has done that and then gone after the customers, using the platform's own transparency, a public blockchain, to find them. That is a different kind of deterrent. A trader in Seoul now knows that a domain block is not the end of the state's interest and that a large position is discoverable after the fact. It is also a test the industry has not faced elsewhere: whether a criminal court, rather than a regulator, will accept that an event contract is a financial instrument.

KRW 5.7bn Is Not a Hobbyist

A single user with about $4m through the platform is a professional, and the concentration of the total in a handful of accounts suggests the Korean user base of Polymarket looks like the American one: a few large traders and a long tail. If the 18 referrals go to trial, the defence will be run by people with the resources to take it to the Supreme Court, which is where the "derivative, not gambling" argument would need to win to change anything.

The Platform's Argument Has Already Lost Once

Polymarket told the KCSC that non-custodial architecture and the absence of a Korean-language service put it outside Korean law. The commission rejected both points, and the police have now shown that the architecture does not protect users either. Whatever the courts decide on Article 246, the idea that a decentralised design places a prediction market beyond a national regulator has failed its first test in Asia.

Twenty-six booked, 18 referred, one question left: whether a Korean judge thinks a yes-or-no contract is a bet.