The Commodity Futures Trading Commission (CFTC) fined crypto predictions service Polymarket $1.4 million and ordered it to shut down its markets and offer users full refunds on charges the company failed to register with the regulator.

The CFTC announced the penalties as part of a settlement with Polymarket on Monday, ordering the company (the operating name for Blockratize Inc.) to wind down all of its markets because it didn’t seek a Designated Contract Market (DCM) or Swap Execution Facility (SEF) registration, two requirements under the Commodity Exchange Act for companies offering binary options in the U.S.

Polymarket is a crypto betting service that allows users to pick one of at least two options on given trades, such as who might win the 2020 presidential election. According to the order published by the CFTC, Polymarket offered at least 900 such markets over the last 18 months.

These markets are swaps under federal law.

Polymarket cooperated with the investigation, according the CFTC’s press release, leading to a reduced fine. The company will stop offering markets by Jan. 14 and commit to making all funds available to users by Jan. 24, according to the order. Polymarket will also cease and desist any further violations of the CEA, though it doesn’t appear the company itself will be shut down.

In a statement, Vincent McGonagle, the CFTC’s acting enforcement director, said that “all derivatives markets must operate within the bounds of the law regardless of the technology used, and particularly including those in the so-called decentralized finance or ‘DeFi’ space.”

Bloomberg reported that Polymarket was under investigation in October. However, now-former CFTC Commissioner Dan Berkovitz said in June 2021 that in his view, decentralized finance (DeFi) markets for derivatives would fall under his agency’s purview.

“The CEA does not contain any exception from registration for digital currencies, blockchains or smart contracts,” he said.

In a statement sent by an external spokesperson, Polymarket said it would wind down three markets and offer refunds to its users by the Jan. 14 deadline. The company plans to share more information in the future about its plans.

“We have been encouraged by our learnings through this experience and have built out an exceptional compliance team and robust internal practices and procedures, which will ensure that compliance remains an integral pillar of Polymarket’s global business going forward,” the statement said.

UPDATE (Jan. 4, 2022, 00:00 UTC): Adds additional context. Adds a statement from Polymarket.

UPDATE (Jan 4, 17:55 UTC): Clarifies that the CFTC and Polymarket settled the enforcement action.