Update (March 27, 8:32 pm UTC): This article was updated to include a statement from Coinbase CEO Brian Armstrong.
Coinbase drew negative reactions after using in-app notifications to promote prediction-market bets during the March Madness college basketball tournament. The exchange launched prediction market betting for U.S. users in January through a partnership with Kalshi, offering wagers on event outcomes similar to platforms like Kalshi and Polymarket. Some users say the push feels like an attempt to get crypto customers “hooked on sports gambling.”
“I have received three separate notifications about College Basketball from Coinbase in the past hour alone,” an X user said, calling the behavior “absurd” given recent industry trust issues and suggesting Coinbase was pivoting toward extracting more fees from gambling-like activity.
PartyDAO co-founder John Palmer echoed concerns, asking whether Coinbase encouraging bets undermines confidence in its money-management philosophy, yield sources on USDC, and internal risk controls.
Prediction markets already face legal pressure: state-level authorities have filed suits against platforms even as the Commodity Futures Trading Commission (CFTC) presses for federal, exclusive jurisdiction over the space. In December, Coinbase itself sued regulators in Connecticut, Illinois and Michigan, arguing the CFTC—not state gambling regulators—should oversee its prediction market service.
Responding to user complaints about the March Madness notifications, Coinbase CEO Brian Armstrong said the messages were sent by a “bug” and apologized: “[W]e’ll need to find the right balance of not pushing things on people they don’t want, but making sure whatever they want is there. Clearly, we missed the mark in this case. We’ll take it as an opportunity to improve.”
Separately, lawmakers are considering restrictions on who can use prediction markets after allegations that insiders and people close to government used such platforms for profit—most notably a claim involving a Polymarket contract tied to the possible removal of Venezuelan President Nicolás Maduro. Bills have been proposed to bar the U.S. President and members of Congress from participating in these markets.
Both Kalshi and Polymarket have updated policies to limit insider trading and ethically sensitive markets. Kalshi said it would ban political candidates from trading on markets tied to their campaigns, while Polymarket introduced rules to curb manipulation and insider-driven markets.
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