The eventful few days underscore the precarious position of both 26-year-old Coplan and his startup Polymarket, the online prediction market that became a household name during the last few months of the presidential campaign—and, in the days and hours before election night, forecast the outcome more accurately than most polls.

In an interview with Fortune earlier this week, Coplan expressed elation about what he had achieved and the future of his company. “I’ve learned that anything is possible,” he said. “Turning dreams into reality has never felt more tangible, and luckily I’m a dreamer. The world is shaped and changed by optimists.”

On Wednesday, though, Coplan’s tone changed. After the FBI seized his phone and laptop, he took to X and defiantly tweeted that the raid was baseless and driven by vindictive political forces upset by the election outcome.

The legal situation is still developing. The FBI declined to comment; Coplan and his attorneys have asserted the founder has done nothing wrong, and neither side has explicitly said what Coplan might be under investigation for—though it’s worth noting that Polymarket is under a federal consent decree not to offer certain prediction contracts to U.S. citizens.

Polymarket declined to comment for this story, noting only that Coplan has also appeared at recent events for Democrats, including one with vice-presidential candidate Tim Walz. (Coplan has also tweeted that he is nonpartisan.)

But how the investigation unfolds may determine whether Polymarket will consolidate its place as an important new force in U.S. politics—or whether Coplan and his company have flown too close to the sun, and opened the door to a competitor to take their place.

A political giant and a VC darling

On election night, Donald Trump’s campaign team grew increasingly jubilant as Polymarket graphs—reflecting the betting activity of tens of thousands of bettors worldwide—showed the spread between their candidate and Kamala Harris growing wider. As early results rolled out, that spread became a chasm. The next day, Trump’s golfing pal Zach Witkoff congratulated Coplan on X, saying everyone in Mar-a-Lago—including the President-elect—had been using Polymarket to gauge the election; one of the most senior figures in Trump’s orbit also phoned Coplan to congratulate him.

Polymarket burst on the scene this year, but the idea behind it is centuries old and reflects a notion, popularized in the book The Wisdom of Crowds, that crowd-sourcing a question can produce very accurate results. In practice, Polymarket users can visit the site and bet on the outcome of various events. On November 14, for instance, bettors could wager 70 cents on the prediction that the price of Bitcoin will hit $100,000 this year; if correct, that 70-cent bet would win a dollar. In theory, the bigger the crowd, the more accurate the prediction.

For weeks, Polymarket had taken on an oracle-like status both in Trump world and among a growing cross-section of the political class. The site had already shown remarkable prescience in anticipating Trump’s selection of JD Vance as his Vice Presidential nominee and that Joe Biden would drop out.  Indeed, Polymarket’s stature had grown such that the country’s most famous pollster, Nate Silver, decided in July to join the company. Over the last three months of the campaign, traditional polls swung wildly, typically showing Trump or Harris either virtually tied or with leads within the margin of error. But Polymarket consistently showed Trump with odds of winning of 60% or better—leading some pundits to lionize the site and its founder when the former president won.

Election-related prediction markets have been banned for decades in the U.S. by the Commodities and Futures Trading Commission. The legality of the CFTC ban, however, has come under question in recent years; a federal district court recently ruled that the ban did not apply to Kalshi, a Polymarket competitor, and other prediction sites have since been emboldened to tout their services more aggressively.

Coplan is very much the face on the emerging industry. He grew up in New York City, the child of academic parents, and sports a distinctive basket of springy curls that help give him the affect of an alt-rock band member. A self-professed “nerdy guy”, Coplan has been deeply interested in probability in high school, leading him to start Polymarket at age 21. The site stands out in part because it relies on blockchain to track wagers, with users employing the stablecoin USDC to pay or cash out.

While Polymarket did not become a well-known name until this year, the firm’s investors include such crypto luminaries as Ethereum founder Vitalik Buterin and former Coinbase CTO Balaji Srinivasan. The startup is also backed by venture capital firms like DragonFly and Peter Thiel’s Founder’s Fund.

So far, Polymarket has raised $74 million and has a staff of around 30. While VCs like to claim they don’t have favorites among their portfolio companies, the organizer of a VC dinner in Manhattan this summer discreetly identified “the Polymarket guy” to Fortune as the most important attendee.

Accurate but controversial predictions

As Polymarket became a fixture of election coverage, it also came under scrutiny. Skeptics pointed out that U.S. citizens were barred from using the platform, meaning the prediction data came from foreigners, not Americans. Others asked whether its predictions might be skewed because of the site’s popularity with crypto users, who mostly lean right politically.

There was also the matter of wash trading—a term that describes one person taking both sides of a trade, often in the hopes of artificially inflating liquidity or trying to game the outcome. Prior to the election, Polymarket’s competitors approached numerous reporters with data purporting to show that the site’s trading data was not reliable. Fortune conducted its own investigation, reaching out to two independent forensics firms, which parsed blockchain data and found that around 30% of Polymarket’s trades consisted of wash trading. In his conversation with Fortune this week, Coplan blasted Fortune’s findings and other stories about unusual data patterns as ill-informed “hit pieces.”

In any case, the implications of wash trading on Polymarket are unclear. Despite the fears of some that bettors could manipulate the betting markets to sway an election, there is no evidence this took place. According to Matthew Beville, a securities lawyer with WilmerHale who co-published a recent article on prediction markets, the wash trading on Polymarket (which is not a client) may have a more banal explanation: The trades could reflect users seeking to rack up activity on the platform in hopes of receiving an “air drop”—a crypto term that describes a project issuing a tradable token to loyal users. The company has declined to comment on whether such tokens are part of its plans.

Coplan can rightfully feel vindicated about Polymarket’s performance in the wake of the election results, but there are still questions about the site and its business model. For starters, trading activity on the site has dropped precipitously since the presidential election, meaning it may prove difficult to develop a regular business outside of major political events. Meanwhile, the popular trading platform Robinhood attracted millions of bets on its own newly launched prediction platform—suggesting that Polymarket could face much greater competition in coming election cycles.

Then there is the question of revenue. Unlike Kalshi and others, Polymarket does not charge commissions. So far, the company has been coy about how it will pay for its continuing operations. One option may be to charge companies or political candidates to run bespoke bets on the site to help them assess future events. Another would be to issue its own crypto token—a prospect that suddenly looks more viable in light of the recent sweep of the White House and Congress by Republicans, who have been far more crypto-friendly than Democrats.

FBI likely waited till after election

For now, though, there is the question of the FBI investigation and what it could signal for the future for both Coplan and Polymarket.

“new phone. Who dis?” wrote Coplan on X on Wednesday afternoon, following up with a second post that alleged the FBI raid of his apartment amounted to a “last ditch effort” by the Biden administration to go after those tied to Trump. Coplan’s tweets came shortly after the New York Post first broke news of the raid in a sympathetic account.

The warrant on which the FBI search would have been based is not yet public, and no indictment has been filed. As such, it’s not possible to know the precise allegations against Coplan and Polymarket. One well-placed crypto attorney, who spoke with Fortune on condition of anonymity to preserve his professional relationships, put the incident in context.

According to the attorney, industry lawyers had been expecting the feds to take action for months in response to what appears to have been slapdash compliance measures by Polymarket. The attorney said any charges would likely be related to allowing Americans to trade on the platform, which would have violated a 2021 consent decree with the CFTC. That decree treats Polymarket as a regulated entity, subject to laws that oblige contract markets to collect data about their customers and to report suspicious activity. In recent months, the company appears to have flouted its obligations by displaying its logo at U.S. based events and hiring American social media influencers to promote the site.

The crypto attorney compared Coplan’s social media behavior to that of FTX founder Sam Bankman-Fried prior to SBF’s indictment—defiant but also foolish. Indeed, the attorney believes that the FBI likely chose to wait until after the election to carry out the seizures in order to avoid appearing political.

The defiant response so far by Coplan and Polymarket may reflect—appropriately enough—a wager that regulators will stand down in reaction to Polymarket’s popularity with the incoming administration.

Coplan’s tweet characterizing the FBI raid as a vindictive move by the Biden administration has already received support from powerful Trump-world figures, including Elon Musk, who replied “Indeed.” Coplan replied to Musk in turn, simply posting an icon of an eagle.