(Bloomberg) -- Polymarket, an online platform for betting on politics, economic indicators and other real-world events, will pay $1.4 million to settle U.S. regulators’ allegations that the trading it offered was illegal and “wind down” contracts people use to wager.

The firm, whose popularity surged during the pandemic, has been running an unregistered platform that lets people people bet on the outcome of events since around June 2020, the Commodity Futures Trading Commission said in a statement Monday. Polymarket didn’t admit or deny wrongdoing in the settlement.

“All derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space,” Vincent McGonagle, the CFTC’s acting director of enforcement, said in the statement. The commission said that Polymarket received a “reduced” penalty for cooperating with the investigation.

Polymarket, operated by New York-based Blockratize Inc., didn’t immediately respond to a request for comment.

Instead of U.S. dollars, customers who want to make trades on Polymarket have to use USD Coin, a stablecoin backed by Coinbase Global Inc. The platform doesn’t take custody of money or digital tokens, and just displays existing markets live on the Ethereum blockchain.

The CFTC didn’t specify the process for Polymarket listing new contracts that comply with its rules. Getting approval to list binary options like the ones that the CFTC says the firm was offering can be a lengthy and complicated regulatory process. 

According to the order settling the allegations, Polymarket must certify to the CFTC by no later than Jan. 24 that it has wound down all of its non-compliant contracts, and must make funds available for redemption by those who had bet in the market.

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