- TikTok took itself offline in the US ahead of a ban last weekend.
- But the social media company returned hours later, citing assurances the law wouldn't be enforced.
- Some Polymarket users are fuming after losing a bet TikTok wouldn't be banned before May.
What exactly happened to TikTok?
It’s a $120 million question, and it’s cast another harsh light on Polymarket and its crypto-based approach to settling bettors’ disputes.
As of Tuesday, Polymarket users had bet almost $120 million on a seemingly straightforward question: would TikTok be banned in the US before May 2025?
When TikTok stopped working for US users Saturday evening, the question appeared settled — TikTok said it had gone dark because “a law banning TikTok has been enacted.”
Polymarket users who had bet “yes” won. UMA, a partner DeFi protocol that acts as a final arbiter of controversial markets on the betting website, affirmed the outcome.
Some users are furious.
The law wasn’t set to take effect until Sunday — the same day TikTok came back online in the US, citing comments made by incoming president Donald Trump. To some, that means TikTok was never banned.
“While the law banning TikTok was upheld and signed into power, its enforcement has been delayed by Biden’s administration and execution was passed onto Trump’s administration,” a critic wrote in a petition posted to change.org.
“Thus TikTok continues to operate due to negotiations, potential extensions, and the involvement of the incoming administration.”
Other Polymarket users put it more bluntly on the website, writing “scam” in the comments.
It’s the latest incident to highlight Polymarket’s occasional struggle to handle things the crypto way — by leaving the outcome of multimillion-dollar bets to a group of token holders led by game theory.
That has repeatedly led to charges, however dubious, that those UMA token holders have rigged bets in their own favour.
Decentralised truth
UMA tokenholders vote to settle questions of fact,. The idea is that collective wisdom is the best way to get at the truth. UMA’s website calls it a “decentralised truth machine.”
Votes are cast in secret and only revealed after polling ends. And if the majority of tokenholders vote that A is true, those that said B is true get penalised — a way to discourage voting for obvious untruths.
UMA has resolved thousands of disputes without incident. But some have brought the protocol sharp criticism.
In June, Polymarket slammed one of UMA’s decisions regarding the launch of a token called DJT and its purported ties to Barron Trump, the president’s youngest son.
Polymarket said it would refund some bettors and introduce a “near-term solution” to “uphold the integrity of the marketplace and pricing.”
It is unclear whether Polymarket has made any changes since. Polymarket did not immediately return DL News’ request for comment.
A year earlier, some Polymarket users fumed when UMA said the US Coast Guard had indeed “found” the Titan submersible, which had imploded deep in the Atlantic Ocean.
Officials were able to recover pieces of the submersible, but not the cabin, as stipulated in the fine print of the bet.
Was TikTok banned?
US lawmakers from both parties voted in 2024 to ban TikTok over fears the company was sharing sensitive user data with its China-based parent company, ByteDance.
The law made it illegal for companies in the US to serve TikTok unless ByteDance sold the social media platform to an American company.
TikTok took itself offline in the US preemptively, and the app was removed from the Apple and Google app stores.
On Sunday morning, however, Trump said he’d sign an executive order confirming “there will be no liability for any company that helped keep TikTok from going dark.”
TikTok came back online shortly thereafter, and it doesn’t appear the Biden administration did anything during its final day in office to punish the company for flouting the law.
While users who had downloaded TikTok before Sunday have been able to access the app since it came back online, the social media platform has yet to return to app stores.
This is possibly because legal scholars doubt that Trump has the authority to unilaterally overrule laws passed by Congress.
In the Discord messaging platform, UMA members said the outcome of the $120 million market was clear. A law had been passed effectively banning TikTok, and that law took effect Sunday. Whether it was being enforced was moot.
“Can you go on [the] street and kill someone? It’s illegal. Does that mean it’s impossible to do it?” one wrote.
“In [the] US in many places jaywalking is a crime. But it’s rarely enforced. Doesn’t mean it’s not illegal where there is a law.”
Others argued that the lack of enforcement meant the ban hadn’t “gone into effect,” per the language of the Polymarket bet.
“By ‘banned,’ we think about some action, some measure of enforcement that make [TikTok] banned,” Denis Stefanov, the petition’s author, told DL News.
But that isn’t what happened.
Context
“TikTok decided to preemptively shut itself down, so nothing was executed in the context of the ban,” Stefanov said.
And some claimed, without evidence, that powerful UMA voters, or whales, had also placed bets on Polymarket, a claim one UMA representative disputed on Discord.
“A lot of considerable voters are staff and are prohibited from doing so,” an UMA representative who goes only by Benni said on Discord.
“Also it just doesn’t make sense, there’s never been any evidence of any of the whales doing so.”
Nevertheless, frustrated bettors flooded the comments section on Polymarket, and are now demanding an investigation into the UMA vote.
As of Friday morning, their petition had garnered 77 signatures.
Updated on January 24 to include comments from Denis Stefanov.
Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.
