New York AG Sues Coinbase and Gemini as Kalshi and Polymarket Race to Launch Crypto Perps
New York Attorney General Letitia James filed lawsuits on April 21 against Coinbase Financial Markets and Gemini Titan, alleging both exchanges operated unlicensed prediction market platforms in violation of state gambling law. The complaints landed on the same day that rival prediction platform Kalshi confirmed plans to launch cryptocurrency perpetual futures on April 27, and Polymarket announced it had already begun offering perpetual futures trading hours earlier.
The State’s Case Against Coinbase and Gemini
The evidence James put before the Manhattan court is straightforward. Neither Coinbase nor Gemini obtained licenses from the New York State Gaming Commission before allowing residents to trade event contracts on sports, elections, and entertainment outcomes. The filings describe users as “bettors” and characterize each contract as “a bet,” pointing specifically to outcomes that are either random or outside the bettor’s control. A second charge follows directly from the first: both platforms permitted users aged 18 to 20 to participate, while New York law sets the minimum age for mobile sports wagering at 21. James’s office is seeking at least $2.2 billion in penalties and forfeited profits from Coinbase, and at least $1.2 billion from Gemini. “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James said in her statement.
Coinbase responded by moving the case to federal court and restating its core legal argument. Chief Legal Officer Paul Grewal said on X that “prediction markets are federally regulated national exchanges” and that the company would “continue to fight for the federal oversight of these markets that Congress intended.” Gemini declined to comment. The CFTC has already sued Illinois, Arizona, and Connecticut to block state-level enforcement of similar claims, and CFTC Chairman Michael Selig has argued the agency holds exclusive jurisdiction over these contracts. New York is not the first state to challenge that position; Nevada, Washington, and others have filed comparable actions, and the question is now working through multiple federal appeals courts, a tension that has followed Coinbase across several recent regulatory fronts.
Bitcoin BTC$61,849.00▲0.94%
Ethereum ETH$1,640.87▲0.08%
Tether USDT$0.9992▼0.02%
BNB BNB$591.12▲0.74%
USDC USDC$0.9999▲0.00%
XRP XRP$1.12▼1.02%
Solana SOL$64.81▲0.46%
TRON TRX$0.3220▲0.27%
Figure Heloc FIGR_HELOC$1.03▲0.49%
Dogecoin DOGE$0.0843▼0.26%Kalshi and Polymarket Move Into Perpetual Futures
Against that backdrop, the two largest U.S. prediction market platforms chose April 21 to signal their pivot into crypto derivatives. According to reporting from Bitcoin Magazine, Kalshi’s April 27 “Timeless” product will initially offer perpetual futures on Bitcoin and other cryptocurrencies, collateralized in U.S. dollars, with stablecoin collateral planned for the second quarter. Polymarket moved first, announcing live perpetual futures trading on April 21 on the Ethereum and Polygon networks, settled in USDC, allowing users to hold leveraged long or short positions continuously without waiting for event resolution.
The strategic context behind both moves is not difficult to reconstruct. Prediction market transactions hit a record 192 million in March 2026. Kalshi already holds the dominant share of tracked U.S. prediction market volume, processes more than $100 billion in annualized trading, and was valued at $22 billion following a March funding round. Daily perpetual futures volume across crypto markets reached nearly $20 billion on April 22, per DeFiLlama data, even though that figure sits at roughly half the historical peak. Both platforms are chasing that pool of activity at a moment when spot crypto trading volumes have contracted.
What makes the timing notable is the simultaneous pressure from opposite directions. Coinbase and Gemini now face state enforcement for entering the prediction market sector, while Kalshi and Polymarket are moving into the crypto derivatives territory those same exchanges occupy. Each side is advancing into the other’s product categories at the precise moment the legal rules governing both remain unresolved. That is not coincidence; it is a calculated bet that federal jurisdiction will hold. Whether it does will be decided in court, not in a product announcement.
