Two Polymarket traders have sued the prediction market platform, accusing it of rewriting the rules after the outcome of a high-profile Strategy Bitcoin market became clear to avoid paying winning bettors.

William Wood and Thomas Bush filed a lawsuit in the New York Supreme Court on July 3 against Polymarket CEO Shayne Coplan and chief marketing officer Matthew Modabber, alleging breach of contract, breach of good faith, unjust enrichment, deceptive business practices and false advertising.

The plaintiffs argue Polymarket improperly changed the settlement criteria after the market had already closed, depriving holders of "Yes" shares of payouts they say they had legitimately earned.

Traders say Polymarket rewrote the rules after Strategy disclosed Bitcoin sale

The disputed market asked whether Michael Saylor's Strategy would sell any Bitcoin by May 31. Strategy later disclosed in a June 1 filing with the US Securities and Exchange Commission that it had sold 32 BTC between May 26 and May 31, marking its first reported Bitcoin sale since 2022.

However, because the filing was published one day after the stated deadline, Polymarket added a clarification stating that confirmation received outside the market's timeframe would not qualify. Following a vote by holders of UMA, the oracle protocol used to resolve disputed markets, the contract was ultimately settled as "No."

However, the traders argue that Strategy's SEC filing should have been sufficient proof under the market's original rules, which identified the company's official disclosures as the primary settlement source. According to the complaint, Polymarket introduced a new confirmation requirement only after the event had occurred, fundamentally changing the basis on which participants placed their bets.

The lawsuit seeks the full $1-per-share payout for the plaintiffs' "Yes" positions, along with damages and legal costs.

The complaint argues that a prediction market that refuses to recognize an objectively verifiable event undermines its own promise of impartial settlement, alleging the platform "does not seek truth; it controls payout."

The dispute comes as Strategy has expanded its Bitcoin monetization plans. The company recently unveiled a framework allowing it to sell up to $1.25 billion worth of Bitcoin to help fund preferred stock dividends and has already sold approximately $216 million worth of BTC under the program.

Growing scrutiny over disputed Polymarket markets

The lawsuit adds to increasing scrutiny surrounding Polymarket's dispute resolution process as the platform continues to expand. Polymarket has recorded more than 1,150 disputed markets in 2026, already exceeding the total number recorded throughout last year.

Previous investigations by Bloomberg and The Wall Street Journal also reported that a relatively small group of large wallets has significant influence over market resolutions and that some UMA voters simultaneously hold positions in the markets they help decide, raising questions about potential conflicts of interest.

The Strategy dispute has become one of Polymarket's most closely watched controversies since last year's $237 million market over whether Ukrainian President Volodymyr Zelensky wore a suit. Burwick Law, which filed the current lawsuit, said it is evaluating similar claims on behalf of additional traders.

Polymarket has not publicly responded to the lawsuit. Despite the growing legal scrutiny, the platform continues to expand its business, with its US arm now registered with the US Commodity Futures Trading Commission and backing from major investors including New York Stock Exchange parent Intercontinental Exchange.