Coinbase is facing increased scrutiny from the Commodity Futures Trading Commission (CFTC) in connection with its involvement with Polymarket, a crypto-based prediction market platform.

On January 8, 2025, the exchange informed its customers that it had received a subpoena from the CFTC, which is examining the platform’s operations.

CFTC Issues Final Crypto Blow

According to an X post by EthHub co-founder Eric Conner, the subpoena seeks general customer information related to their involvement with Polymarket. Coinbase, however, clarified in its email that no immediate action is required from users but noted that it could be obligated to provide specific account details unless a legal motion is filed to block the request before January 15, 2025.

This action comes amidst a crackdown on decentralized betting platforms, with the CFTC considering Polymarket’s operations similar to gambling, raising questions about regulatory adherence.

These developments also come on the heels of a tumultuous period for Polymarket. FBI agents raided Polymarket CEO Shayne Coplan’s Manhattan apartment on November 13, following the platform’s accurate prediction of Donald Trump’s election victory. Sources claimed the raid was politically motivated, with Coplan himself criticizing the move as a “last-ditch” effort to target political opponents. Polymarket, previously fined by the CFTC, also faces regulatory scrutiny over alleged market manipulation.

Despite Polymarket’s move to block US users following a 2022 settlement with the CFTC, some users have reportedly bypassed these restrictions using VPNs, leading to further concerns over potential market manipulation and illicit betting.

Meanwhile, the latest subpoena to Coinbase marks a significant moment in the ongoing regulatory tension between the US government and the cryptocurrency sector. Under the Biden administration, the CFTC and other regulatory agencies have been making final efforts to tighten oversight of the cryptocurrency industry. This is expected to change once Trump takes over.

Trump’s Bold Crypto Gambit

Throughout his presidential campaign, Trump was vocal about his strong support for the cryptocurrency industry and pledged to take measures to enhance its adoption if elected. Since his victory, he has started delivering on these commitments, including appointing pro-crypto figures to key positions, such as Paul Atkins, who will succeed Gary Gensler as SEC chairman.

He also appointed appointed former PayPal COO David O. Sacks as the “czar” for artificial intelligence (AI) and cryptocurrency. Meanwhile, Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy were tasked with leading the newly formed Department of Government Efficiency (D.O.G.E.)