Polymarket sued in New York over Strategy Bitcoin market payout dispute

Two traders, William Wood and Thomas Bush, filed a lawsuit on July 3 in the New York Supreme Court against prediction‑market platform Polymarket, its founder Shayne Coplan, CMO Matthew Modabber, and affiliated entities. The suit alleges that Polymarket improperly resolved a binary market asking whether Strategy (formerly MicroStrategy) would sell any Bitcoin before May 31 2026. Strategy’s SEC Form 8‑K disclosed a sale of 32 BTC between May 26 and May 31, satisfying the market’s original condition. Polymarket nonetheless settled the market as “No” after adding a post‑event clarification requiring public confirmation within the deadline, and UMA token holders voted 98.6 % to uphold that resolution.

The plaintiffs claim breach of contract, breach of the implied covenant of good faith, unjust enrichment, deceptive business practices, and false advertising under New York law. The market attracted roughly $85 million in total volume, with about $53.8 million open interest on the May 31 slice. The case could set a legal precedent for how decentralized platforms draft and enforce market rules and for the role of optimistic oracles such as UMA. Polymarket is also facing broader regulatory scrutiny from the U.S. Commodity Futures Trading Commission.