Polymarket faces New York lawsuit over disputed Strategy bitcoin market resolution

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Polymarket lawsuit over bitcoin

Highlights

William Wood and Thomas Bush filed a lawsuit in New York Supreme Court on July 3, alleging Polymarket breached contract and engaged in deceptive practices regarding a disputed bitcoin market resolution.
The plaintiffs claim Polymarket wrongly resolved a market as 'No' after adding post hoc language requiring public confirmation by May 31, despite Strategy's Form 8-K showing a 32 BTC sale between May 26 and 31.
The suit seeks damages and legal fees, while Polymarket's main platform posted $10.7 billion in June monthly trading volume and its U.S. platform reported $3.25 billion.

Court complaint centers on market rules

As reported by The Block, citing a complaint filed in the New York Supreme Court on July 3, William Wood and Thomas Bush allege that Polymarket and several executives breached contract terms and used deceptive practices in resolving the market. The defendants named in the suit include Polymarket, Chief Executive Shayne Coplan, Chief Marketing Officer Matthew Modabber, and related entities and individuals.

The disputed binary market asked whether Strategy would sell any of its bitcoin holdings by May 31. The complaint says the plaintiffs held "Yes" shares and that Strategy's Form 8-K filing with the U.S. Securities and Exchange Commission states the company sold 32 BTC between May 26 and 31.

According to the complaint, Polymarket later resolved the market as "No" after adding clarifying language that, the plaintiffs say, effectively required public confirmation by the May 31 deadline rather than a sale by that date. A final review on June 3 ended with a "No" outcome after a UMA vote, the mechanism used on Polymarket to settle disputed markets.

The plaintiffs argue that Strategy's filing was sufficient evidence under the market's stated rules because information from Strategy was designated as the primary resolution source. They say any post-resolution change to the standard undermines Polymarket's claim that its markets are governed by predefined and objective rules.

Claims, damages and broader platform backdrop

The suit includes claims for breach of contract, breach of the implied covenant of good faith and fair dealing, money had and received, unjust enrichment, and alleged violations of New York General Business Law covering deceptive acts and false advertising. The plaintiffs seek damages to be determined at trial, including the $1.00-per-share redemption value of their "Yes" positions, along with legal fees and costs.

The filing states that if a platform can impose a confirmation-by-deadline requirement after the event, then its promise of rules-based resolution becomes materially misleading. No response from Polymarket is detailed in the initial court filing, and the company had not publicly answered the allegations in the text provided.

The case emerges as prediction markets continue to draw higher trading activity. In June, Polymarket's main platform records $10.7 billion in monthly trading volume, while its U.S. platform reports $3.25 billion, according to The Block's data dashboard.

Our earlier article on Strategy (MSTR) covered the company’s recent Bitcoin sale and how it fits into broader liquidity and capital-structure management, including actions tied to funding preferred dividend payments. We also outlined the near-term technical setup for MSTR/USD, noting a consolidation range with bullish short-term momentum despite the stock remaining below longer-term trend levels.

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