On June 1, Strategy disclosed that it sold 32 bitcoins between May 26 and 31. This information subsequently sparked a settlement dispute regarding related prediction contracts on Polymarket: the transaction occurred at the end of May, but the public disclosure occurred in June.
May and June contracts are settled separately.
Polymarket ultimately settled contracts ending May 31 as "No" and contracts ending June 30 as "Yes". The point of contention is whether contracts should be settled based on the actual time the transaction occurred or the time of public disclosure.
Traders who support a "yes" ruling for the May contract argue that Strategy clearly stated the sale occurred between May 26 and 31. The opposing side maintains that the market should only make its decision based on information publicly disclosed on June 1.
A few large households dominate the voting results
As the dispute resolution layer for the Polymarket oracle, UMA holders ultimately sided with the latter. This means that users who bet that Strategy would sell Bitcoin by the end of May were ruled to have lost, even though subsequent disclosures showed the trades did indeed occur in the last week of May.
- borntoolate.eth has a weight of approximately 3.11 million.
- Kevin Chan cast approximately 1.53 million weighted votes.
- The top four "no" votes combined accounted for nearly 7 million weighted votes.
The report noted that some wallets identified as being associated with Risk Labs, the company behind UMA, also participated in the "no" vote. This has once again drawn attention to whether on-chain governance could be dominated by a small number of large token holders.
Galaxy Research objected.
Galaxy Research, having significant exposure to the May contracts, subsequently publicly opposed the settlement method on the X platform. The firm stated that Strategy's 8-K filing with the SEC clearly indicated that the sale of 32 bitcoins occurred between May 26 and 31.
The agency believes that, based on the interpretation of the contract text, the settlement terms should focus more on the time of the sale, rather than the announcement date of June 1st. This controversy also once again exposes the settlement difficulties faced by prediction markets when dealing with discrepancies between the "time of event" and the "time of information disclosure."
