A fast-growing crypto betting platform is facing scrutiny over how it routes most of its business through an offshore company - allowing it to offer wagers that would be banned in the United States.

Polymarket, now valued at more than $11 billion, lets users bet on everything from elections to arrests. But critics say its structure is key to how it avoids the strict rules that govern American exchanges.

Around 97 percent of its trades are handled through a little-known company in Panama called Adventure One QSS Inc, meaning much of its activity falls outside US oversight.

That setup has allowed a wide range of controversial markets to flourish - including, most recently, bets tied to a real-life kidnapping.

Users wagered more than $188,000 on whether an arrest would be made in the disappearance of 84-year-old Nancy Guthrie, effectively turning an active criminal case into a betting market.

The example has fueled fresh concerns about how far these platforms can go when operating beyond US rules.

Under US law, platforms cannot allow wagers tied to events like war, terrorism, assassination or death. But those kinds of markets have appeared on Polymarket's offshore site.

The company was founded in 2020 by US entrepreneur Shayne Coplan, then 22, who launched it during the pandemic as a way for users to bet on real-world events using cryptocurrency.

Polymarket, a crypto-based betting platform where users wager on real-world events, conducts the vast majority of its business - around 97 per cent by volume - through a little-known Panamanian company called Adventure One QSS Inc

Initially, Polymarket marketed itself as a more transparent alternative to traditional betting or forecasting, arguing that market prices reflect collective beliefs.

But as it grew, it also drew scrutiny from regulators, particularly in the US, because event-based contracts can fall under derivatives law.

That regulatory pressure led to a major turning point. In January 2022, the Commodity Futures Trading Commission (CFTC) fined Polymarket's original US entity Blockratize Inc $1.4 million and ordered it to wind down unregistered markets.

Shortly after, the platform's main activity shifted offshore to a Panama-incorporated entity, Adventure One, which now handles the vast majority of trading volume.

Only a small part of its business - roughly 3 percent - runs through a registered American entity that complies with oversight from the CFTC.

The Panama-based company, however, is not subject to those same requirements. That means it does not have to carry out identity checks, monitor trading in the same way, or restrict certain types of bets.

Despite this, company leadership remains closely tied to the founder Coplan and current president Harry Jones are both based in the United States, according to public records.

Under US rules, platforms cannot allow betting on events involving war, terrorism, assassination or death. Those restrictions stem from the Commodity Exchange Act, which governs financial derivatives markets.

The company - now valued at more than $11 billion - was founded by Shayne Coplan (pictured), a US-based entrepreneur, in 2020, when he was just 22 years old

Adventure One QSS Inc., incorporated in Panama in 2021, is not registered with US regulators and is not subject to the same rules governing American exchanges

Yet such markets have appeared on Polymarket's offshore platform, alongside a wide range of geopolitical and other high-risk event contracts.

In January, an anonymous user turned a $32,000 bet into more than $400,000 by correctly betting Venezuelan president Nicolás Maduro would be captured. Most of the trades came just hours before the surprise US operation that removed him from power.

On another occasion, online sleuths spotted one anonymous account that correctly predicted nearly every outcome tied to the Super Bowl halftime show.

The structure Polymarket operates by also allows users to trade without providing personal information.

Unlike US-regulated exchanges, which require identity verification and sanctions screening, access to the offshore platform typically only requires a crypto wallet.

Critics argue this creates potential risks, including the possibility of trading by sanctioned individuals, minors, or bad actors using anonymous accounts.

Researchers have also raised concerns about trading activity on the platform.

A 2025 academic study out of Columbia Business School and Barnard College found that roughly a quarter of transactions showed patterns consistent with 'wash trading' - a practice where traders buy and sell to themselves to artificially inflate activity. On regulated exchanges, such behavior is banned and monitored through surveillance systems.

Separate analyses have flagged unusual trading patterns tied to major geopolitical events, with some accounts appearing to place highly accurate bets shortly before key developments.

While these findings do not prove wrongdoing, they have fueled debate about whether unregulated prediction markets are vulnerable to manipulation or insider advantage.

Regulators around the world have taken notice.

More than 15 jurisdictions - including the UK, France, Singapore and Canada's Ontario province - have either blocked access to Polymarket or taken enforcement action against its offshore operations.

Authorities have cited concerns ranging from unlicensed gambling to lack of investor protections.

In the US, regulators previously fined Polymarket's earlier operating entity and ordered it to shut down certain markets.

Shortly after, operations shifted to the Panama-based company.

The situation highlights a broader dilemma for regulators.

Demand for prediction markets - where users bet on everything from elections to economic indicators - continues to grow.

Last month, Intercontinental Exchange announced that it had invested $600 million in Polymarket, as the New York Stock Exchange parent expands into the fast-growing event-based trading segment.

Polymarket faced backlash for allowing users to profit from bets tied to the alleged kidnapping of the elderly mother of Today show host Savannah Guthrie

More than $188,000 was staked on whether an arrest would be made in the kidnapping case by February 28

The funding is part of the exchange operator's previously announced plan to invest up to $2 billion in Polymarket, ⁠the company said.

But strict rules in the US limit what regulated platforms can offer.

As a result, some of that demand is moving offshore, where platforms face fewer restrictions but also less oversight.

Supporters argue prediction markets can provide valuable insights and crowd-sourced forecasting.

Critics counter that without proper safeguards, they risk enabling harmful or unethical betting activity.

Polymarket declined to comment to the Daily Mail.

How Polymarket is run through unregulated foreign entity