New York-based decentralized prediction market Polymarket is under the scrutiny of a top Wall Street regulator.

The Commodity Futures Trading Commission (CFTC) is investigating whether Polymarket is letting customers improperly trade binary options or trade swaps and if it should be registered with the agency, according to a Bloomberg report citing people familiar with the matter.

The firm, however, is not accused of any wrongdoing, and CFTC investigations do not always lead to enforcement cases.

“Polymarket is firmly committed to complying with applicable laws and regulations and to providing information to regulators that will assist them with any inquiry,” a spokesman for the firm said in response.

The company also has law firm Sullivan & Cromwell partner James McDonald handling the probe, who was head of the CFTC's enforcement division until last year, Bloomberg said, citing sources.

Since launching last year, Polymarket has facilitated about 4 billion shares. Trades on the prediction market are made using the stablecoin USDC.

Amidst this, the company is in talks with investors on a new round of funding that would value it at about $1 billion. Last year, Polymarket raised $4 million in venture capital.

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