Polymarket Fined $243k over Offering Binary Options to Ontario Residents

The Ontario Securities Commission (OSC) has reached a detailed settlement with Blockratize Inc. and Adventure One QSS Inc., the operators of Polymarket, over their unregistered offering of binary options to Ontario residents.

The Capital Markets Tribunal approved the settlement on April 17, 2025, imposing significant sanctions and securing enforceable undertakings to restrict further violations.

Illegal Offering of Binary Options

Between June 2020 and May 2023, Blockratize and its successor, Adventure One, operated the blockchain-based prediction market platform Polymarket, accessible to Ontario residents via polymarket.com and associated mobile applications. The platform facilitated trading in “event-based contracts,” primarily binary options with yes/no outcomes, tied to real-world events like inflation data or Olympic medal counts.

These instruments fell under the definition of binary options as per Multilateral Instrument 91-102 Prohibition of Binary Options (MI 91-102): fixed-outcome bets with maturities under 30 days. During the period in question, Polymarket listed over 6,000 contracts, with nearly 60% of all trades occurring within 30 days of maturity, directly violating MI 91-102’s prohibition against offering such products to retail investors in Ontario.

Platform Mechanics and Exposure in Ontario

Polymarket used smart contract protocols on the Polygon blockchain to create and resolve binary options contracts. Users could trade options via self-hosted wallets or smart contract wallets generated by email signup. Contracts were settled in USD Coin (USDC), with winning options paying out at par and losing options expiring worthless.

Key engagement tools on the platform included:

A live interface displaying dynamic price data and volume per contract;

Trading incentives such as maximum profit projections;

Promotional campaigns via social media, a leaderboard, giveaways, and Discord announcements;

A knowledge center to explain the trading process.

Although the companies claimed not to target Ontario specifically, the OSC cited 28,454 website visitors from Ontario and attributed $22,966.75 USD in revenue to users from the province.

Respondents and Regulatory Background

Blockratize, incorporated in Delaware, operated Polymarket until January 2022, at which point operations shifted to Adventure One QSS Inc., registered in Panama. In January 2022, the U.S. Commodity Futures Trading Commission had already sanctioned Blockratize for similar violations under the Commodity Exchange Act, further highlighting the platform’s ongoing regulatory exposure.

The respondents made no effort to seek registration or exemptions in Ontario and did not engage in pre-launch compliance discussions with the OSC.

Terms of the Settlement

The Tribunal approved a settlement agreement under Sections 127 and 127.1 of the Securities Act (Ontario), which includes:

Two-Year Trading Ban: Both entities are prohibited from trading or acquiring securities or derivatives in Ontario, except for allowing Ontario residents to close existing Polymarket positions.

Exemption Removal: All exemptions under Ontario securities law are denied for two years.

Ban on Registration or Promotion: Neither respondent may register or act as a promoter in Ontario during the ban period.

Monetary Penalties:

$200,000 administrative penalty

$25,000 in investigation costs

$22,966.75 USD voluntary payment representing estimated Ontario revenue

All payments were made prior to the settlement hearing, as acknowledged by the OSC.

Binding Undertaking to OSC

In addition to the order, both companies executed a binding Undertaking with the Commission, with the following commitments:

Maintain website Terms of Use explicitly barring Ontario residents.

Publicly announce trading restrictions via the platform and affiliated social media.

Implement technical controls to block Ontario IPs from accessing Polymarket for deposits or new trades (except redemptions).

Restrict marketing directed at Ontario residents or events held in the province.

Deliver annual compliance certificates for two years confirming restrictions remain in effect.

Engage in good faith regulatory discussions before any future attempt to offer products in Ontario.

Failure to comply with any terms of the agreement or undertaking could reopen enforcement proceedings.

Conclusion

The OSC considers this settlement a critical enforcement action under MI 91-102, affirming its position against unauthorized binary options platforms. In a statement, the regulator reiterated its mission “to provide protection to investors from unfair, improper or fraudulent practices” and cautioned investors to verify the registration status of any entity offering trading services in Ontario.

The Tribunal panel included Chair Russell Juriansz, Jane Waechter, and James Douglas. The order is now in effect, with full restrictions and undertakings binding until at least April 2027.