Polymarket shifts 29 Strategy bitcoin lawsuits to federal court

Polymarket moved 29 New York state-court lawsuits brought by traders over a disputed Strategy bitcoin market into the U.S. District Court for the Southern District of New York, creating a procedural fight over whether the claims belong in private arbitration.

The removals were filed between Sept. 29 and Oct. 8. Polymarket has asked to consolidate the cases before Judge Jeannette A. Vargas, with Hernandez v. Adventure One QSS as the lead case.

The underlying market asked whether Strategy would sell any bitcoin by May 31. Strategy disclosed in a June 1 Securities and Exchange Commission filing that it had sold 32 bitcoin between May 26 and May 31, for about $2.5 million in total.

At about 1 p.m. Eastern time on June 1, Polymarket added a market-page qualification saying that “confirmation achieved outside of the market’s time frame does not qualify.” The market subsequently resolved “No” after a final UMA token-holder vote on June 3, with about 98.6% of voting power supporting that outcome.

Junior’s complaint alleges that the qualification was added after the relevant event and after the filing became public. Galaxy Research described the difference between the sale date and the date of confirmation as a retroactive rule change. The contract drew about $301 million of trading volume.

Other contracts in the same Strategy series, with June 30 and Dec. 31 deadlines, resolved “Yes” without dispute at roughly 99.9% pricing.

Burwick Law filed the first suit on July 3 for William Wood and Thomas Bush, alleging breach of contract and false advertising and seeking $6.5 million. The complaints identify 1,868 affected traders. In an Aug. 27 complaint, Marcel Junior estimated that their “Yes” shares were worth about $6.5 million at settlement and put their losses at about $3.8 million.

Junior alleged that he held roughly 44,992 “Yes” shares, which would have paid about $44,992 at $1 each, after spending about $169. His complaint names Adventure One QSS, Blockratize, Shayne Coplan and Matthew Modabber as defendants, and brings claims including breach of contract, breach of the implied covenant of good faith and fair dealing, deceptive practices and false advertising.

The cases were transferred in batches: two on Sept. 29, seven on Sept. 30, nine on Oct. 1, seven on Oct. 2, and four across Oct. 7 and 8. Court records confirm that Hernandez was removed on Sept. 29 and Wood on Oct. 2.

At least nine federal dockets, including Junior’s, cited 9 U.S.C. § 205, an arbitration-related jurisdiction provision, as the basis for removal. Polymarket’s current terms require final, binding individual arbitration, bar class actions and apply Panamanian law.

The defendants moved on Oct. 9 to consolidate Hernandez with 28 other federal cases. Burwick Law opposed consolidation in Hernandez on Oct. 23, another opposition was filed in Salem on Oct. 26, and Polymarket replied on Oct. 30.

Polymarket answered Wood’s complaint on Oct. 9 and answered complaints by Junior, Rosen, Du, Singh and Delaney on Oct. 15. As of Nov. 3, the reviewed dockets showed neither a motion to compel arbitration nor a motion to return any case to state court.