New York Attorney General Letitia James has filed lawsuits against Coinbase and Gemini over their prediction market products, seeking $3.4 billion in combined fines in what amounts to the largest state-level crypto enforcement action tied to prediction apps.
The lawsuits, filed in April 2026, allege that both exchanges operated illegal gambling platforms through their prediction market offerings. James’s office argues the products violated New York law by allowing users to place wagers on real-world outcomes without proper licensing.
What New York is alleging and why the fine totals $3.4 billion
Key Takeaways
- New York AG Letitia James sued Coinbase and Gemini for allegedly running illegal gambling through prediction market products.
- The state is seeking $3.4 billion in combined penalties from both exchanges.
- The lawsuits could reshape how crypto platforms offer prediction-style products in New York.
The Attorney General’s office filed a petition against Coinbase Financial Markets Inc. and a separate action against Gemini’s subsidiary. Both filings characterize the exchanges’ prediction products as unlicensed gambling operations under New York state law.
The combined penalty figure represents fines and disgorgement the state is demanding across both cases. New York regulators have historically taken an aggressive stance on crypto enforcement, but this action marks a significant escalation in targeting prediction market features specifically.
How the prediction apps worked and what triggered the lawsuits
Prediction markets allow users to buy and sell contracts tied to the outcome of real-world events, from election results to economic data releases. When offered through crypto platforms, these contracts are typically settled in stablecoins or tokens on blockchain rails.
According to the filing against Gemini Titan LLC, the state alleges these products functioned as binary wagers rather than legitimate financial instruments. The core legal argument is that prediction contracts, where users risk money on uncertain outcomes, constitute gambling when offered without appropriate state authorization.
Both Coinbase and Gemini had expanded their prediction market offerings in recent months, a trend that accelerated after Polymarket’s success during the 2024 U.S. election cycle. The expansion drew regulatory attention as prediction products reached retail users in states with strict gambling statutes.
What the case could mean for crypto platforms and users in New York
If successful, the lawsuits could force Coinbase and Gemini to shut down their prediction market features for New York users entirely. The filings request injunctions barring both companies from offering the products in the state, alongside the monetary penalties.
The cases also set a precedent for how other states might classify crypto-based prediction products. As AP News reported, the enforcement action signals that state regulators view prediction markets through a gambling lens rather than treating them as financial derivatives, a distinction that carries significant compliance implications for the broader industry.
This action arrives amid a wider pattern of global crypto enforcement. Regulators in the UK recently raided sites over illegal P2P crypto trading, and the ongoing CLARITY Act debate in Congress highlights unresolved tension between innovation and oversight at both state and federal levels.
For users currently holding prediction market positions on either platform in New York, the immediate risk is that geoblocking or service restrictions could follow as the litigation progresses. Meanwhile, traditional crypto products continue expanding through other channels, with developments like GSR’s new multi-asset crypto staking ETF on Nasdaq showing that regulated financial products remain on the rise even as prediction markets face scrutiny.
The next procedural step is for both exchanges to file responses to the petitions. Court dates have not yet been publicly scheduled, and neither Coinbase nor Gemini has issued a formal public response at the time of publication.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
