Bloomberg: about $200 million in Polymarket bets showed signs of insider trading in the first half of the year

Bloomberg says it found roughly $200 million in Polymarket bets with signs of insider dealing over the first six months of the year. For PSPs, exchanges, and banks touching prediction markets, the point is not just market abuse: it is how fast these flows can turn into AML, surveillance, and law-enforcement issues.

1. Bloomberg analyzed 34,000 transactions on Polymarket’s global platform and flagged suspicious bets using several markers: bet size, wallet age, position concentration, and timing, including trades placed shortly before major events. A large share of the flagged activity was in political prediction markets, especially those tied to Iran and Venezuela.
2. Bloomberg also noted that these indicators do not, by themselves, prove the use of non-public information. Polymarket said that after the investigation it tightened monitoring for suspicious activity and shared data on nearly 100 crypto wallets with law enforcement.
3. The Bloomberg report comes after researchers from Stanford University and the Singapore Management University said they found systematic manipulation of settlements on Polymarket. They said Binance customers used short contracts to profit illegally from bitcoin price forecasts, affecting five-minute binary bitcoin contracts launched in February.
4. According to the study, 821 wallets were linked to the manipulation, which the authors described as one out of every 300 active traders on the contract. Those addresses earned $8.2 million over two months.
5. The platform has also faced headline-grabbing enforcement cases. In one, the U.S. Department of Justice accused a U.S. Army master sergeant of using secret information about an operation against Venezuelan president Nicolás Maduro to place bets on Polymarket; the complaint said he invested more than $33,000 and made about $409,881 in profit. The CFTC brought a parallel case.

Another case involved Google engineer Michele Spagnuolo. U.S. prosecutors and the CFTC accused him of using confidential data on Google search trends to bet on prediction markets. Authorities said he placed about $2.7 million in bets and made about $1.2 million in profit.