Polymarket is under investigation by the Department of Justice for allegedly allowing U.S. residents to trade on its platform, contravening a regulatory settlement. Despite efforts to block U.S. IP addresses, legal experts argue that this may not suffice for compliance, particularly given Polymarket's past regulatory issues. Some U.S. users are reportedly circumventing geographical restrictions using VPNs. While the platform has implemented geofencing measures, experts suggest enhanced identification processes, like know-your-customer (KYC) protocols, could better prevent access to restricted users, though this risks user privacy. The recent raid on Polymarket’s CEO has raised concerns about its future amid regulatory scrutiny. As a decentralized platform, Polymarket does not gather extensive personal data, making it challenging to enforce geofencing effectively. The investigation serves as a case study reflecting broader compliance dilemmas faced by crypto companies, especially regarding their responsibilities in relation to U.S. laws.

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