$200 million in suspicious transactions on Polymarket: Analysis of insider trading in prediction markets
Prediction markets like Polymarket have become a new arena for insider trading. My analysis of data spanning from August 2025 to June 2026 identified approximately 34,000 transactions with signs of using non-public information. The total volume of these suspicious trades exceeded $200 million over six months.
The Polysights service evaluated each transaction based on eight criteria, including bet size, account age, event probability at the time of entry, and volume concentration on individual outcomes. This approach helps identify atypical behavior but does not prove wrongdoing. Some participants may have simply been better prepared or taken a calculated risk.
The story of 21-year-old TikToker Kaden Booth is particularly telling. Twelve hours before the Super Bowl, he timed the national anthem rehearsals with a stopwatch and placed over $50,000 on the performance lasting under 117 seconds. The anthem lasted 104 seconds — the bet paid off. Although Booth did not break any rules, his case demonstrates how blurred the line is between resourcefulness and a threat to market integrity.
Geopolitics and Profit Concentration
The main driver of the surge in activity was geopolitical betting. The daily volume of suspicious trades peaked in late February amid events surrounding Iran. Winnings are distributed extremely unevenly: more than half of all money went to 1% of the most profitable wallets, with 57% of them created less than a day before the trades.
A group of 38 linked addresses bet on U.S. actions in Iran and Venezuela with 98% accuracy, earned $1.6 million, and withdrew funds through a single Coinbase account. This is not just luck — it is systematic use of inside information.
Platform and Regulatory Response
In the U.S., charges were brought against military serviceman Gannon Ken Van Dyke — according to the investigation, he earned over $400,000 using classified data about the operation in Venezuela. A similar case was opened in Israel: a reservist and a civilian were accused of betting based on confidential military information about the country's actions in Iran.
Polymarket tightened its rules in late March, banning trades using stolen information and illegal insider data, and provided law enforcement with information on nearly 100 wallets. The White House sent a warning to employees, and the Senate unanimously banned such bets for its members and staff. Goldman Sachs restricted access to prediction markets for employees, excluding only sports and entertainment.
However, some economists see no harm in insiders. Economist Robin Hanson believes their trades make prices more accurate, and "secret keepers" should remember: traders always have an incentive to uncover them.
My expert opinion: Prediction markets are becoming a mirror of traditional finance — with the same insider trading issues but without regulatory protection. As long as platforms react post-factum rather than proactively, trust in such markets will remain fragile. Investors should consider: high returns on Polymarket may signal not genius, but access to non-public information.