Pre-Strike Wagers Trigger Insider Trading Scrutiny on Polymarket
Six cryptocurrency wallets generated approximately $1 million in profits by accurately predicting a US military strike against Iran before the end of February. The cluster of accounts, all created in February, funneled nearly all their activity into contracts forecasting the timing of a potential attack, according to data from analytics firm Bubblemaps SA. In several instances, shares were acquired for roughly $0.10 mere hours before explosions were first reported in Tehran, raising immediate questions regarding the provenance of the information driving these trades.
The scale of capital deployed during the escalation was substantial. More than $529 million flowed into strike-related contracts on the prediction platform Polymarket. The specific contract predicting a Feb. 28 date attracted the highest volume at roughly $90 million, followed by a Jan. 31 scenario which drew about $42 million. One flagged account demonstrated a pattern of high-risk behavior, having previously lost capital on an earlier prediction before placing a larger wager that returned more than $170,000 once the strike materialized.
Nicolas Vaiman, chief executive of Bubblemaps, noted that in cases involving war or conflict, information often circulates within a broader circle before becoming public. He emphasized that Polymarket's requirement for only a wallet to trade, allowing for high anonymity, creates incentives for informed participants to act early. The platform has not yet responded to inquiries regarding the specific mechanics of these trades.
Pattern of Early Information Advantage Across Multiple Events
The Iran betting activity is not an isolated anomaly but part of a recurring pattern of suspected insider trading on the platform. A cluster of wallets previously earned more than $1.2 million by betting on an onchain investigation into DeFi platform Axiom. This activity coincided with claims published by investigator ZachXBT regarding insider trading by an Axiom employee and associates since early 2025. Similarly, a Polymarket account generated about $400,000 from a wager on the capture of Venezuelan President Nicolás Maduro, placing roughly $32,000 shortly before the news became public.
These incidents highlight the friction between the speed of information dissemination in geopolitical events and the regulatory frameworks governing prediction markets. The ability to execute large, anonymous trades on outcome-based contracts allows those with nonpublic information to monetize intelligence before the broader market reacts. The anonymity inherent in the platform's architecture, where a wallet suffices for trading, appears to facilitate this rapid exploitation of informational asymmetries.
Legislative Response and Global Regulatory Crackdown
In response to these recurring allegations, US Representative Ritchie Torres is preparing the Public Integrity in Financial Prediction Markets Act of 2026. The proposed legislation aims to bar elected officials, political appointees, and executive-branch employees from trading contracts tied to government policy when they possess nonpublic information. The bill seeks to close the loophole that currently allows such actors to leverage their positions for financial gain on prediction markets.
Simultaneously, the platform faces a widening regulatory net internationally. Polymarket has encountered significant headwinds, with nine countries—Netherlands, Hungary, Belgium, France, Italy, Romania, Poland, Singapore, and Portugal—blocking or banning the platform. These jurisdictions have classified the platform's event-based contracts as unlicensed online gambling, forcing a retreat from major European and Asian markets. The convergence of domestic legislative proposals and international bans suggests a tightening environment for prediction markets, where the tension between market efficiency and regulatory compliance is reaching a critical point.
Source: CoinTelegraph | Analysis by Rumour Team