South Korean Police Track Polymarket Users via Blockchain Analysis

Regulatory Crackdown on Decentralized Prediction Markets

The National Police Agency in Seoul launched the inquiry following a surge in local retail participation on international crypto-native betting platforms. Under South Korea’s strict Gambling Industry Control Act, unauthorized wagering—both online and offline—remains illegal unless explicitly sanctioned by the state, such as through authorized lottery operations or horse racing tracks. Law enforcement officials stated that investigators are leveraging blockchain analytics tools to deanonymize wallet addresses tied to South Korean Internet Protocol addresses, tracing transactions back to domestic centralized exchanges.

Market observers note that while Polymarket operates outside domestic jurisdiction as a decentralized application built on blockchain networks like Polygon, users must typically fund their non-custodial wallets via regulated fiat-to-crypto ramps. South Korean financial authorities have intensified scrutiny on these onboarding ramps, enforcing strict Know Your Customer (KYC) and Anti-Money Laundering (AML) standards that allow investigators to subpoena user identification records when illicit gambling activity is suspected.

Foreign Exchange Control Violations and Crypto Ramps

Beyond illegal gambling statutes, South Korean regulators are examining potential breaches of the Foreign Exchange Transactions Act. Moving capital abroad without proper authorization through commercial banks constitutes a criminal offense under national financial laws. Because purchasing cryptocurrency on domestic exchanges and transferring it to offshore smart contracts often bypasses traditional banking reporting thresholds, authorities are treating unauthorized offshore betting flows as potential capital flight.

Financial intelligence units within the country have flagged a notable uptick in peer-to-peer (P2P) crypto transfers and over-the-counter (OTC) desk transactions utilized by traders attempting to obfuscate the destination of their funds. Investigators confirmed that analytical software provided by blockchain forensics firms is being deployed to map transaction graphs, isolating wallets that frequently interact with prediction market smart contracts.

Next Steps in the Investigation

Law enforcement officials indicated that preliminary data gathering will be followed by formal inquiries into identified domestic users, with potential referrals to prosecutors for statutory violations. South Korean financial regulators are expected to issue updated compliance guidelines targeting domestic digital asset service providers to prevent unauthorized capital routing toward offshore gambling protocols.

Readers can follow ongoing updates regarding South Korean financial regulations and digital asset enforcement actions through official announcements from the Financial Services Commission and the National Police Agency.