Polymarket is facing a New York lawsuit from two traders who claim the platform wrongly settled Strategy’s Bitcoin sale market after changing the resolution standard.
William Wood and Thomas Bush sued in New York Supreme Court on July 3, alleging Polymarket refused to redeem shares they say should have paid out.
The dispute centers on a recurring market asking whether Strategy, formerly MicroStrategy, would sell any of its Bitcoin by May 31, 2026. The plaintiffs say Strategy did sell and cite its filing as proof.
On June 1, Strategy filed a Form 8-K stating it sold 32 BTC between May 26 and May 31, its first disposal since December 2022. The sale was worth about $2.5 million at an average net price of $77,135.
Strategy Filing Drives Dispute
Wood and Bush argue that the Form 8-K, named as the main resolution source, answered the contract’s binary question in favor of “Yes.”
According to the complaint, Polymarket later issued clarification language that shifted the standard from whether Strategy sold Bitcoin before the deadline to whether the sale was publicly confirmed within the market window.
Galaxy Research called the episode Polymarket’s biggest resolution test since last year’s $237 million Zelenskyy suit market.
It said original wording was event-based, resolving “yes” if Strategy sold “any of its Bitcoin” by the deadline. After the filing appeared, “Yes” odds reportedly rose from about 10% to 80%. One trader bought about 700,000 Yes shares near 76 cents, treating the move as arbitrage.
Polymarket later stated that no information from Strategy, on-chain data, or credible reporting had confirmed a sale within the market’s timeframe.
It added that “confirmation achieved outside of the market’s time frame does not qualify.” Afterward, “Yes” shares fell below one cent. Following two disputes and a 48-hour review, the market resolved “No” for a third time and settled near 99.7 cents on the No side.
Traders Seek Damages
The lawsuit seeks damages for breach of contract, breach of the implied covenant of good faith, unjust enrichment, deceptive business practices, and false advertising under New York General Business Law.
The plaintiffs also challenge Polymarket’s marketing language, including its claim that markets “seek truth,” arguing such claims are misleading if resolution standards can change after an outcome is known.
The filing says Polymarket controlled rule drafting and clarifications, although the settlement used the UMA Optimistic Oracle.
The case adds legal scrutiny around prediction market payouts. Kalshi previously faced a New York lawsuit over its “Ali Khamenei out as Supreme Leader?” market.
Polymarket also faces a reported CFTC investigation into allegations that it paid creators to post simulated trades and fabricated winnings, which it has not publicly addressed.
