$200 million in Polymarket trades were flagged for potential insider activity in H1 2026 after analysis of about 34,000 transactions identified patterns in wallet age, bet timing, size and market concentration.
57% of the most profitable suspicious wallets were created less than 24 hours before trading, and the top 1% of profitable wallets captured more than half of all winnings.
February produced the sharpest spike, with large bets tied to U.S. military action and the Iran war; one new account made $370,000 on a 6%-odds U.S.-Iran peace bet.
Another cluster of 38 connected wallets bet across 90 Iran- and Venezuela-linked markets, won 98% of them and withdrew roughly $1.6 million through the same Coinbase deposit account.
The flags do not prove wrongdoing, but Polymarket said it has referred nearly 100 wallets to law enforcement as rival Kalshi reported more than 150 Q1 investigations and 20-plus referrals.
With millions won on war bets, can regulators stop classified secrets from being traded on crypto markets?
As AI uncovers sophisticated insider trading, are prediction markets becoming a new threat to national security?
Prediction Markets in Crisis: Polymarket’s $529M Insider Trading Probe and the Coming Regulatory Hammer
Overview
Polymarket is facing a major crisis as allegations of insider trading have drawn intense scrutiny from regulators and lawmakers. In response, the platform has started sharing wallet-level data with authorities to help investigate potential illicit activities, but connecting specific trades to the misuse of confidential information remains complex. Polymarket has also admitted mistakes, such as removing a controversial market about a downed U.S. pilot. The situation highlights the challenges of regulating prediction markets, where proving insider trading is difficult due to pseudonymous accounts and evolving rules, pushing both the platform and regulators to strengthen oversight and transparency.