Key Takeaways:
A Bloomberg investigation found $45 million in suspicious trades on Polymarket's Iran war contracts, with wallets created hours before major geopolitical events.
Polymarket's Iran-related prediction contracts drew $45 million in suspicious trades before major geopolitical announcements, a Bloomberg investigation found, as congressional probes intensify over insider trading risks on the platform.
"The pattern of wallet creation timing and bet sizing is statistically consistent with trading on non-public information," said a researcher at Bubblemaps, the blockchain analytics firm that identified nine anonymous accounts earning $2.4 million with a 98 percent win rate on Iran-related bets.
One wallet created two hours before its first trade on June 2 bought "Yes" contracts on a US-Iran permanent peace agreement when the market priced the probability at 6 percent. After Pakistan's prime minister announced the deal on June 14, the contract resolved in favor of "Yes," netting the wallet about $370,000 in profit. Eight other wallets collectively earned more than $520,000 on US airstrike contracts, placed hours or days before the first reported strikes on Feb. 28.
The findings threaten to undermine confidence in Polymarket's resolution process just as the platform's geopolitics category has become its fastest-growing vertical, attracting about $5 billion in bets this year. The U.S. Army has already secured the first insider trading conviction related to prediction markets, and lawmakers in May launched probes into how Polymarket handles sensitive geopolitical contracts.
Polymarket's geopolitics category exploded in 2026, driven almost entirely by users wagering on US military actions involving Iran. Iran-related bets surpassed $2 billion in total volume within the first four months of the year. A single contract titled "US strikes Iran by...?" generated over $529 million in trading volume by early March, and the platform hosted more than 170 active markets tied to Iran by mid-June.
The appetite for peace-related contracts proved equally strong. A market focused on a potential US-Iran peace deal attracted over $479 million in trading volume by mid-June, making it one of the largest individual contracts on the platform. That market later entered Polymarket's dispute process after the June 15 deadline, with more than 99 percent of UMA tokenholder voting power backing a "Yes" outcome despite ambiguity over whether the signed memorandum of understanding met the contract's definition of a "permanent peace deal."
Trading volumes in geopolitics averaged a daily increase of 8.4 percent throughout March, outpacing every other category on the platform. April set a record with more than $1.5 billion in monthly volume.
The insider trading allegations have drawn attention from Washington. Congressional probes launched in May demanded answers about how Polymarket handles sensitive geopolitical contracts and whether the platform has adequate safeguards against traders acting on non-public government intelligence. The White House has warned employees against using classified information for betting, and the Senate has banned lawmakers and staff from trading on prediction markets.
Polymarket said it updated its rules earlier this year to explicitly prohibit trading on stolen confidential information or illegal inside information. The company said it is working with multiple agencies to identify trading patterns consistent with informed trading and has referred nearly 100 wallets to law enforcement, including referrals that led to the first and second insider trading convictions in U.S. prediction markets.
The challenge of enforcement remains significant. Polymarket users trade through anonymous blockchain wallets that cannot be directly linked to brokerage accounts, making it harder to identify the real identities behind suspicious trades. Traders can also spread positions across multiple newly created wallets, making it difficult for analysts to track their full portfolio.
For the broader crypto prediction market sector, the stakes are high. The $45 million abnormal trading figure and documented cases of wallets being created hours before major geopolitical events to make highly profitable bets could trigger increased regulatory scrutiny, potential enforcement actions, and dampen user confidence in Polymarket's geopolitical contracts. Any resulting regulations could impose compliance requirements, know-your-customer mandates, or outright restrictions on certain contract types.
This article is for informational purposes only and does not constitute investment advice.
