New York Sues Coinbase and Gemini..."Prediction Market = Illegal Gambling?"

▲ United States, lawsuit/AI generated image

New York State has initiated a full-scale lawsuit against Coinbase and Gemini, classifying their prediction market businesses as illegal gambling.

According to foreign media on April 21 (local time), New York Attorney General Letitia James filed a lawsuit in Manhattan State Court, deeming the prediction market platforms operated by Coinbase and Gemini to be illegal gambling in violation of state law. These platforms are structured for trading based on the outcomes of sports, elections, and economic events.

James stated, "So-called prediction markets are essentially gambling and cannot evade the regulations of state law and the constitution." New York State claims that the two companies operated their services without a license from the New York State Gaming Commission and is demanding a cessation of operations along with legal sanctions.

The lawsuit also includes the issue of underage users. Although the minimum age for mobile sports betting under New York law is 21, it was pointed out that these platforms allowed users aged 18 and over. Simultaneously, there are claims that the companies evaded the approximately 51% tax rate applied to legal gambling operators.

New York State is demanding the recovery of unjust profits, civil penalties up to three times the amount in question, user compensation, and restrictions on marketing on college campuses.

This lawsuit is proceeding amidst a conflict between state and federal regulatory bodies over the authority to regulate prediction markets. While the Commodity Futures Trading Commission (CFTC) views prediction markets as derivatives and asserts federal jurisdiction, New York State is approaching them as gambling regulation and continues its strong enforcement.

As the prediction market industry rapidly grows, this lawsuit is considered a case that truly exposes the regulatory risks associated with the expansion of new businesses by cryptocurrency companies.

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