Bets before the decision - suspicion of insider knowledge shakes Polymarket

Shortly before the announcement of a ceasefire between the United States and Iran, newly created accounts on the platform Polymarket, an online betting market where users wager with cryptocurrencies on political and economic events, placed strikingly precise bets - and generated six figure profits within a few hours. What stands out is not only the amount, but the timing. While the public situation was still defined by escalation and there were hardly any indications of an agreement, these wallets placed targeted bets on exactly that outcome.

Blockchain data shows that at least 50 newly created wallets entered large Yes positions on the same day. Some of them only hours, others even minutes before the official announcement. One single account turned about 72,000 dollars in stake into roughly 200,000 dollars in profit. Others followed with similarly striking hits.

The structure behind this raises questions. Polymarket operates with so called proxy smart contract wallets. A user can therefore create multiple accounts in parallel without this being publicly attributable. This makes it nearly impossible to determine whether these are truly new participants or existing actors splitting their tracks. It also raises the possibility that far fewer actual individuals may be behind the many accounts.

The suspicion is obvious that this was not just speculation. Several political voices are openly speaking of possible insider knowledge. The allegation: access to information before the public could have been deliberately used to generate profit. At the same time, pressure is growing in the US Congress across party lines to regulate such markets more strictly and to extend insider trading rules to these platforms.

What makes this particularly sensitive is that such constellations are not isolated cases. Similar patterns have already been observed before other geopolitical events, in military developments as well as political upheavals. Again and again, new accounts appear that act at exactly the right moment.

The specific market on the ceasefire has meanwhile been marked as disputed. The reason: the actual situation remains unclear while military activities and restrictions continue. Payouts could therefore be delayed while it is being examined in the background whether the conditions of the event have even been met.

The platforms themselves are also increasingly under pressure. Both Polymarket and comparable providers have acknowledged that existing control mechanisms are not sufficient to reliably prevent problematic trading patterns.

What remains is an open question that goes beyond this case. When political decisions are traded in real time and individual actors regularly get it right before everyone else, it is no longer just about risk or luck. Then it is about access to information - and who has it.

The investigation is ongoing. To be continued …