South Korean Police Refer 18 Polymarket Users to Prosecutors in $12.7 Million Crypto Gambling Probe

South Korean authorities have formally booked 26 users of the blockchain-based prediction platform Polymarket on suspicion of illegal gambling, with the total value of wagers traced to those individuals reaching roughly 17.6 billion won — approximately $12.7 million. According to National Police Agency materials submitted to the office of lawmaker Yoon Kun-young and first reported by Asia Business Daily on Sept. 17, 18 of the 26 cases had already been referred to prosecutors by Sept. 15, signaling a rapid shift from evidence-gathering into the prosecutorial phase. The Gangwon Provincial Police Agency’s Cyber Investigation Unit, which is leading the probe, also identified a single-user betting total of approximately 5.7 billion won, marking the largest amount attributed to any one suspect among those booked.

The case stands as one of the most aggressive enforcement actions taken against individual users of an offshore crypto prediction platform anywhere in the world. Police began preliminary inquiries in March and formally booked suspects starting in May, according to the reviewed data. The investigation, which crypto.news identified in June as South Korea’s first known probe into domestic Polymarket users, has drawn attention not only for its scale but for the investigative methods behind it. Because Polymarket operates as a non-custodial peer-to-peer venue, authorities say they had no conventional customer registry — no real-name list, no centralized account database, no withdrawal ledger in the form typically associated with licensed exchanges. Instead, investigators relied on public blockchain transaction records and open-source intelligence tools to connect wallet activity to specific individuals, a technique that is becoming increasingly common as law enforcement agencies worldwide adapt to the transparency of distributed ledgers. The police materials do not disclose the wallet addresses linked to the 26 suspects, which means independent verification of the reported wager totals remains impossible from public records alone. Still, the sheer scale of the sums involved — particularly the 5.7 billion won attributed to a single user — suggests a level of financial activity that goes far beyond casual speculation, and it has placed Polymarket firmly in the crosshairs of South Korean regulators.

Blockchain Trail: How Investigators Identified Suspects Without a Customer Registry

The investigative trail in this case is notable precisely because it did not begin with a subpoena to the platform itself. Polymarket, by design, does not maintain the kind of real-name customer database that centralized trading venues are typically required to keep. Instead, its non-custodial, peer-to-peer architecture means users interact directly through smart contracts, transacting in digital assets and bearing the risk of their positions without an intermediary holding funds in a traditional custodial structure. For investigators, that design choice posed a challenge — but not an insurmountable one. Police told Digital Asset that they were able to trace public blockchain transactions using open-source intelligence tools, mapping the movement of digital assets from platform wallets to individual addresses and, ultimately, to identifiable individuals. The Gangwon cyber unit’s ability to build cases against 26 separate users through this method reflects a broader trend in crypto enforcement: the blockchain’s transparent ledger, often described as a feature by proponents, also functions as a permanent forensic record for law enforcement agencies.

The investigation actually began months before the bookings. According to the police data reviewed, preliminary inquiries opened in March, and by May investigators had begun formally booking suspects. The June reporting by crypto.news had already identified the Gangwon inquiry as the first known South Korean police investigation specifically targeting domestic Polymarket users, and at the time authorities were still examining whether participation in event-based prediction contracts could reasonably fall within the country’s gambling statutes. The new figures answer that question in at least a preliminary sense: 18 of the 26 booked users have been referred to prosecutors, meaning investigators believe they have sufficient evidence to support criminal charges. It is important to note, however, that neither the police materials nor the published reports indicate whether indictments have been issued, whether trial dates have been set, or whether any court has rendered a judgment in any of the cases. The referrals represent law enforcement’s position, not a judicial determination, and the legal question at the heart of the matter remains open to challenge.

Legal Foundation: Criminal Act Article 246 and a Landmark Supreme Court Ruling

The legal framework underpinning the investigation is Article 246 of South Korea’s Criminal Act, a provision that makes simple gambling punishable by a fine of up to 10 million won, while habitual gambling carries the threat of imprisonment for up to three years or a fine of up to 20 million won. Police have cited a 2008 Supreme Court ruling in support of their interpretation, and that precedent is central to understanding why they believe Polymarket trading falls within the reach of criminal law. The Court held that gambling can exist when property is wagered on an outcome that the parties cannot certainly predict or freely control — even when skill or ability plays a meaningful role in determining the result. In other words, the presence of some degree of expertise does not automatically transform a wager into a legitimate financial transaction. What matters is whether, at the moment the stake is placed, the outcome carries a genuine element of uncertainty that is beyond the participant’s full control.

Applying that precedent to Polymarket, police told Digital Asset that the platform’s activity can satisfy Article 246 when users stake digital assets on an event and either receive settlement proceeds or lose their purchase amount depending on an uncertain result. Police also made clear that the absence of a specific regulatory guideline for prediction markets, or the structural resemblance to derivatives trading, does not automatically shield users from gambling charges. In their view, the economic substance of the transaction — placing assets at risk on an uncertain outcome — meets the statutory definition, regardless of the platform’s technical architecture. The stakes in the Korean context are significant: users found to be habitual gamblers could face imprisonment, and the 5.7 billion won figure attributed to the lead suspect, if proven in court, would almost certainly be treated as habitual behavior. The legal reasoning is consistent with the broad reading of gambling statutes that Korean courts have applied in other contexts, where the focus is on the nature of the wager rather than the label attached to the instrument.

Users Mount a Derivatives Defense, but Courts Have Yet to Weigh In

Not surprisingly, the users under investigation reject the police interpretation. According to Asia Business Daily, their position is that Polymarket functions as a virtual asset-based derivatives market, where probability contracts can be bought and sold before final settlement rather than simply wagered on a binary outcome. In their telling, the ability to exit a position, trade on an order book, and transact at fluctuating prices resembles investment activity more than gambling. This is not a trivial distinction, at least in theory: if the contracts are genuinely traded instruments with a secondary market, the argument runs, they belong in the realm of financial regulation, not criminal gambling law. Attorney Kim Tae-rim of AXIS Law told the publication that courts examining the issue may focus on structural features such as the order-book trading mechanism and the capacity to close positions before maturity. Kim also noted, however, a significant legal vulnerability in the users’ position: the contracts claimed to be prediction derivatives fall outside the existing Capital Markets Act framework, which limits the usefulness of that statute as a direct criminal defense. In other words, the law that would classify these instruments as legitimate financial products does not actually cover them, leaving users caught in a regulatory gap where their strongest argument lacks a solid statutory foundation.

The uncertain status of prediction markets in South Korean law is precisely what makes this case so closely watched. If prosecutors secure convictions, it would effectively establish that Polymarket and similar platforms are gambling venues under Korean law, and that domestic users are subject to criminal liability simply by participating. If the courts side with the users, it could pave the way for a more nuanced regulatory approach that treats such contracts as a new asset class. For now, though, the balance of power is clearly with investigators. No court ruling identified in the reviewed Korean sources has yet decided whether Polymarket’s order-book probability contracts fall outside Article 246 because of their claimed derivatives-like features. The 18 case files now sitting with prosecutors represent the next step in that process, and the eventual judicial outcome will likely set a precedent that extends well beyond the 26 individuals currently caught in the investigation.

Regulators Move to Block Polymarket Access Nationwide

While the criminal investigation has been unfolding, South Korean regulators have also taken regulatory action at the platform level. The Broadcasting, Media and Communications Review Committee voted on Aug. 18 to block domestic access to Polymarket, concluding that the service provided what the regulator considered an illegal gambling environment to local users. The committee’s review focused on markets tied to politics, economics, sports, elections, and weather — categories where users put assets at risk on events they cannot control. Regulators argued that Polymarket manages market rules and settlement infrastructure while receiving economic benefit from activity on the platform, making it an operator of gambling services rather than a neutral technology provider. The decision effectively made Polymarket inaccessible to users in South Korea, though the practical effectiveness of such blocks is often limited for technically sophisticated users who can employ VPNs or other tools to bypass restrictions.

Polymarket pushed back during the review process, arguing that its non-custodial peer-to-peer model, the absence of Korean-language services, and the lack of Korean won payment support meant it should not be treated as the operator of an illegal gambling venue. The regulator was unmoved. In its ruling, the committee said technical characteristics or service structure do not constitute grounds for evading the applicability of domestic law, pointing to South Korea-focused markets on the platform and its winner-takes-all settlement structure. The August action followed an earlier hearing process, with regulators having postponed a final decision while giving Polymarket an opportunity to present its position before the access restriction was approved the following month. That sequence of events — the police investigation, the prosecutorial referrals, and the regulatory block — suggests coordinated attention across different branches of the South Korean government, all converging on the same conclusion: Polymarket’s operations, at least as they relate to Korean users, are on the wrong side of the law.

A Tale of Two Platforms: U.S. Regulation and the Unresolved Legal Question

The contrast between Polymarket’s legal status in South Korea and its standing in the United States is striking, and it underscores the fragmented nature of global crypto regulation. Polymarket’s website states that its international platform is not regulated by the U.S. Commodity Futures Trading Commission. Its U.S. business, however, operates through QCX LLC, which CFTC records list as a designated contract market, d/b/a Polymarket US, with the designation dated July 9, 2025. In other words, the same company operates two distinct businesses — one authorized as a registered futures venue in the United States, and another serving international customers outside the CFTC’s jurisdiction. The U.S. structure does not change the legal basis stated by South Korean police, however. Investigators have grounded the domestic user cases in South Korea’s Criminal Act, while the media review committee has maintained that a platform’s technical or service structure cannot by itself prevent the application of domestic law.

Additional filings connected to the regulated U.S. business have surfaced as well. Polymarket affiliates have filed three National Futures Association applications connected with plans for margin trading, though those filings concern the regulated U.S. business and are entirely separate from the South Korean police cases. The existence of a fully licensed U.S. venue operating under CFTC oversight may actually complicate the Korean users’ defense. If the company itself has sought formal regulatory approval in the United States to offer certain prediction products, it becomes harder to argue that identical products are purely unregulated derivatives immune from gambling statutes elsewhere. On the other hand, the fact that U.S. regulators explicitly authorized the business model could be cited by defense attorneys seeking to legitimize the activity in other jurisdictions.

As of the latest reporting, no court in South Korea has rendered a judgment on the core legal question, and the published police materials offer no indication of when indictments might be issued or hearings scheduled. Eighteen case files have been sent to prosecutors, and for the 26 users now caught in this investigation — including the unidentified individual whose wagers reached 5.7 billion won — the waiting game is only just beginning. Whatever the courts ultimately decide, this case has already established a template for how law enforcement can pursue users of non-custodial platforms through blockchain analysis rather than traditional customer records. That template, once demonstrated in South Korea, will not go unnoticed by regulators elsewhere. As prediction markets continue to grow in global popularity, the question of whether they are gambling or finance — or a novel hybrid requiring entirely new rules — is becoming one of the defining regulatory debates of the crypto era, and the Seoul courts may well provide one of the first major answers.