A group of nine Polymarket cryptocurrency wallets collectively earned $2.4 million by successfully betting on US military developments with an unusually high 98% win rate, according to blockchain data firm Bubblemaps. These wallets placed critical wagers just before significant events, including a US strike on Iran and the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei.
Bubblemaps noted that the wallets received funds primarily from centralized cryptocurrency exchanges within a short period. The wallets also made minor losing bets days before their large successful wagers, a tactic believed aimed at avoiding detection. Four wallets alone each secured approximately $400,000 by betting on the US attack that took place on February 28. Although Bubblemaps has not confirmed these accounts directly belong to insiders, the pattern indicates a potential informational advantage.
Nicolas Vaiman, CEO of Bubblemaps, emphasized the suspicious nature of these transactions, highlighting the routing of funds through exchanges and third-party services before betting, which could mask the origin of the assets and trading activity. This case underscores growing apprehension around insider trading in decentralized prediction markets.
US lawmakers have responded to rising concerns about insider trading linked to war-related prediction market contracts. Senator Adam Schiff introduced the DEATH BETS Act, which proposes banning federally regulated prediction markets from offering contracts tied to war, terrorism, assassinations, or individual deaths. This legislative effort followed reports of traders netting large sums from bets on military actions, including a $1 million gain from a US strike on Iran.
In addition, California Governor Gavin Newsom signed an executive order restricting public officials from participating in prediction markets where they might exploit privileged information relating to political or economic events. These measures reflect attempts to tighten regulation in this emerging and largely unregulated space.
Prediction markets have gained traction as platforms for forecasting political and military events. Polymarket currently features politics-related contracts as the third-largest category, accounting for 12% of its trading volume. On Kalshi, they rank fifth, representing nearly 1% of weekly trade volume. This volume spotlight underscores their growing influence and the potential risks tied to insider information in these decentralized ecosystems.