Polymarket’s Rush to Grow at All Costs

0:00Katherine Long: Your financial life rarely fits between 9 and 5, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi Wealth team built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com slash AI. Citi Wealth investment products and services are provided by Citigroup Global Markets, Inc., member FINRA and SIPC.

0:33Welcome to Tech News Briefing. It's Tuesday, September 22nd. I'm Isabel Busquette, a reporter for the Wall Street Journal Leadership Institute. Landfill operators are facing an ongoing labor shortage. We're digging into what they hope could be the solution, remotely controlled and autonomous bulldozers. Then, we're taking you inside our latest investigation into Polymarket, and how the company's rush to grow left the door wide open for fraudsters.

1:07But first, at the Marana Regional Landfill near Tucson, Arizona, workers are regularly driving a 40-ton bulldozer. But these days, that's happening from the safety and comfort of a trailer hundreds of yards away. The site has become a proving ground for remote-controlled and autonomous machines, aimed at improving safety and reducing operating costs. It's still early days for the technology, which could face more challenges as it scales out. But bulldozers could just be the beginning. WSJ's Bob Tita, who traveled to Tucson for a firsthand look, joins us now to share his insights on the latest in autonomous machinery.

1:51Bob, paint the picture for us. What was it like walking into this landfill? It's huge. It's an enormous place. And being in Arizona, it's out in the desert. So it's just very dry and not a lot of vegetation, of course. You know, there's always big trucks that bring trash in from the transfer stations in the Tucson area, and they dump their trash there. So it's pretty much throughout the day, pretty busy place. And there are bulldozers, but now some of them are operating without somebody actually inside? Yes, the bulldozer that spreads the trash is being remotely operated. They set up a Wi-Fi network just at the landfill for this equipment.

2:38So you have these kind of portable Wi-Fi towers that are connected to a trailer. And of course, the machine is connected to the network as well. And so the operator in the trailer can direct the machine in the landfill. And why are the landfill operators so interested in investing in this capability? There's a couple reasons. One is just it's becoming more and more difficult to get people who are skilled operators of heavy equipment like this. Turnover particularly, you know, it's been pretty high in recent years. And so that's a concern. Also, there is a shortage of operators because a lot of people who did this work for years and years are retiring.

3:30And just like a lot of other professions, particularly in equipment operators, the number of people coming into the profession are smaller. So the idea ultimately would be that if you needed to, you could have one person operate perhaps multiple pieces of equipment. And so what companies are making these autonomous bulldozers and what other kind of equipment do they maybe have planned? WM is using Caterpillar equipment and Caterpillar has been working on this for a number of years. And they already do some economist equipment in big mines where trucks kind of run on a closed course without a driver.

4:14So they have been working on this for a number of years. Now they're extending it to other applications, particularly things like landfills and eventually construction sites as well. The actual operators you talked to, how did they feel about this? Were they worried about ultimately being replaced by autonomous machines or were they just happy that they didn't have to sit in the cab anymore? They're basically happy that they don't have to sit in a cab anymore. It's a much easier environment to spend all day working in instead of being jostled around in a cab. I don't believe they're concerned about just being replaced because there's a number of pieces of equipment at the site that need to be operated.

5:00And so the intent is that this will free them to do more, you know, maybe different work, more challenging jobs, leaving very repetitive work to either autonomous or remote control technology. That was WSJ reporter Bob Tita. How do you feel about heavy machinery like bulldozers being operated remotely or autonomously? If you're a listener on Spotify, let us know your thoughts in the comments. And coming up, Polymarket has been working to reposition itself to investors and the general public as a more mature company focused on responsible growth. But so far, it's been a rocky road. That's after the break.

5:51Katherine Long: Your financial life rarely fits between nine and five, and the questions shaping your future don't follow a schedule. That's why Citi created Citi Sky, a secure AI member of your Citi wealth team built with the Gemini platform on Google Cloud. Whether expanding your portfolio or planning your future, you'll be able to access tailored wealth guidance on your time. Start building with Gemini at cloud.google.com slash AI. Citi wealth investment products and services are provided by Citigroup Global Markets, Inc., member FINRA and SIPC.

6:24Prediction markets are hotter than ever. But they're also getting into hot water with investors, customers, and regulators. And Polymarket is no exception. It's doing everything in its power to woo new users and investors. But in the process, the company has struggled with compliance failures, legal challenges, and software blunders, according to current and former employees. WSJ's Catherine Long joins us to share the latest on the platform and what it needs to do to drive towards a successful public debut next year. And before we get started, we should note, Polymarket has a data partnership with Dow Jones, the publisher of The Wall Street Journal.

7:09Catherine, you reported that in February there was a huge uptick in fraudsters attacking Polymarket's new app, which was in beta testing and only available to a limited number of users. Tell us, what were the fraudsters doing?

7:23Katherine Long: So Polymarket's debit card payment processor, Checkout.com, told the company that it was seeing rates of attempted fraud as high as 80%. Basically, what was happening was that these fraudsters had stolen debit cards and they were linking those stolen cards to new Polymarket US accounts. Polymarket US is the company's flagship new US app that is regulated by the CFTC. And it's where the company is hoping that most of its growth going forward is going to come from. 80 % seems high. Is that high? 80 % is significantly higher than the industry standard, which is about 1%. Now, most of those attempted deposits failed, but the fraudsters were essentially hoping to take money from these debit cards.

8:08Katherine Long: Okay, so this is all happening. What is the response from CEO Shane Copland? The response, according to people who are familiar with the matter, from Copland was essentially he wasn't too worried. He said, just keep growing and pay a fine if regulators find out. In fact, the company decided to strip back one of its key anti-money laundering protections during this fraud attack because Copland was so concerned about customers getting access to their funds quickly. And the response to this fraud attack had slowed access to some of those funds because the compliance team was so busy trying to trace where all of this money was coming from and going.

8:48Katherine Long: Copland's signed off on a decision to effectively make that go faster. And in doing so, it stripped back some of the platform's AML protections. This is not the first time Polymarket has run into some big challenges. The Commodity Futures Trading Commission is investigating the company. It's been accused of deceptive business practices by traders. And several state lawsuits are looking into whether Polymarket and competitors like Kalshi are unlicensed gambling platforms. How has Polymarket responded to all of this? Polymarket has said that it's repositioning itself. They are making some key hires, people who have experience in risk management, in financial investigations.

9:29Katherine Long: They recently hired a former FBI agent. They say that they're really moving forward into a new era of responsible growth. They're saying we are a much more mature company than we used to be. And part of this is because they are eyeing a potential IPO by the end of 2027. Another thing you reported was that the company has run into some issues with what you might call shoddy engineering and rushing out new features. What kind of problems has that creative. Our reporting showed that polymarkets culture had at times led to glitches that cost individual users thousands of dollars. We spoke, for instance, with one user, Dane Collins, who said that during a separate fraud attack in July, a fraudster had sold close to$6 ,000 in gains on his account.

10:20Katherine Long: Now, that was the result of an exploit in which anybody who had the private information, the social security number, for instance, of a current Polymarket user could use that information to gain access to their account without needing their username or their password. Now, according to a person familiar with the matter, about 500 users were affected. Collins and some of the other users we spoke to say that the response from Polymarket, they found it to be underwhelming. They said it was difficult for them to get a response from customer support. Collins in particular said that his account was credited$25.

10:53Katherine Long: He didn't hear anything from Polymarket for weeks and weeks. And they've subsequently placed his account on hold. Like you mentioned, Polymarket is possibly shooting for an IPO in the next year. What does the company have to tackle now in order to do that and be successful? They need to prove to their investors and to users that they are a place where users can responsibly and reliably trade money. And that's behind some of their new hires. In addition to these risk management and compliance folks that they've brought on board, they've also brought on new engineering personnel, and they've hired their first chief financial officer, Warren Jensen, who was Amazon's chief financial officer in the early 2000s.

11:32Katherine Long: Like I said, they are seeking to reposition themselves internally, externally to investors as a more mature company. That was WSJ reporter Catherine Long. And that's it for Tech News Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by Julie Chang with supervising producer Katie Ferguson. I'm Isabel Busquets, a reporter for the Wall Street Journal Leadership Institute. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

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