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Ethereum betting site fined $8 million in US

Betting site on Ethereum is fined R$8 million in the United States

Polymarket, a gambling site created in Ethereum (ETH), was fined $1.4 million. The penalty was imposed by the US Commodities and Futures Trading Commission (CFTC).

Based on the current price, the fine corresponds to R$7.9 million. According to the CFTC, the site offered binary options contracts. After the fine, the Polymarket will have until January 14 to stop offering its services to US customers.

However, these contracts were offered without Polymarket being licensed to operate in the US. In other words, the site supposedly let people place bets without registration.

Vincent McGonagle, Director of Enforcement for the CFTC, commented on the matter. For the executive, market rules should cover all companies, even those created in blockchain.

"All derivatives markets must operate within the limits of the law, regardless of the technology used and particularly including those of so-called decentralized finance or DeFi."

Binary Options: Understand

According to the indictment, Polymarket offered bets on binary options. In this type of model, users place very short-term bets. The objective is to bet on whether a particular asset will rise or fall. Once this is done, the investor can profit in one of two scenarios.

The Polymarket had a wide range of betting that was not restricted to cryptocurrencies . It was also possible to bet, for example, whether annual inflation in the US would be 7.0% or more in December 2021. Another open binary option was whether Donald Trump would be the presidential name for the US elections in 2024.

Unlike the traditional options market, binary options work like a game of chance. If the investor got the forecast right, he earns the profit. If wrong, bears the loss of the operation. Because of this, many countries limit or even prohibit operations in this type of market.

Binary options are not regulated in Brazil, that is, the platforms do not have authorization from the Brazilian Securities Commission (CVM) to attract clients in Brazil. The US, in turn, allows this market, as long as local regulations are complied with.

However, Polymarket will be able to continue operating normally in the rest of the world. The restriction on attracting customers is valid only in the US territory.

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