Crypto Platforms Face Tennessee Cease-and-Desist Orders Amid Regulatory Pressure

Cryptocurrency platforms Polymarket, Kalshi, and Crypto.com are under regulatory scrutiny as the Tennessee Sports Wagering Council has issued cease-and-desist orders. This action raises questions about whether these prediction markets align with traditional betting platforms.

Regulatory Challenges for Crypto Platforms in Tennessee

Sports betting attorney Daniel Wallach announced via X that cease-and-desist letters were sent to Polymarket, Kalshi, and Crypto.com. The council instructed these platforms to halt offering sports event contracts to Tennessee residents, void current contracts, and process refunds by January 31.

The Tennessee regulator warned that non-compliance could lead to legal action. This is not the first instance for Kalshi and Crypto.com, as they previously received similar orders from Connecticut's Department of Consumer Protection. Kalshi has contested Connecticut's directive, but the state argues against the firm's injunction, suggesting no irreparable harm would result from ceasing unlawful activities.

Heightened Scrutiny on Prediction Markets

The Tennessee order coincides with increasing attention on prediction markets. A recent incident involved a Polymarket trader earning $400,000 by betting on the exit of Venezuela's former President Nicolás Maduro, sparking insider trading allegations. This prompted legislative actions, such as Congressman Ritchie Torres's proposal to ban political insiders from prediction markets.

Congresswoman Dina Titus has also voiced concerns about Polymarket's regulatory compliance, particularly after the Maduro incident. She has requested clarification from CEO Shayne Coplan regarding the company's measures to prevent insider trading and ensure market fairness.