Polymarket sends nearly 100 wallets to law enforcement over suspicious trading activity

Monitoring and referrals

Chief Legal Officer Neal Kumar said Polymarket’s internal review process has led to nearly 100 wallet referrals to authorities. The company has also tightened surveillance as regulators and investigators look more closely at whether traders in event contracts may have benefited from confidential or otherwise nonpublic information.

Because Polymarket activity is recorded on a public blockchain, wallet behavior can be examined after the fact. Investigators are able to trace funding routes, transaction histories and trading patterns even when accounts operate under pseudonymous addresses. That visibility has made wallet-level referrals more useful to authorities, though a referral alone does not establish wrongdoing.

What the flagged trades show

A Bloomberg analysis, based on Polysights data, found about $200 million in trades that showed features commonly associated with possible informed activity. The review focused on indicators such as newly created wallets, heavily concentrated positions and bets placed shortly before major events.

Those patterns can help identify accounts that warrant closer inspection, but they are not proof of insider trading. Polymarket has not said that every referred wallet violated the law or relied on nonpublic information, and a referral does not mean charges will follow.

Recent U.S. cases raise pressure

The scrutiny around prediction-market trading has intensified following recent U.S. enforcement actions. In one case, the Department of Justice accused Army Master Sergeant Gannon Ken Van Dyke of using classified information about a U.S. military operation targeting Nicolás Maduro to trade on Polymarket. According to the allegations, he made about $409,881 after placing more than $33,000 in bets tied to Maduro’s removal. The CFTC filed a parallel case, while the Justice Department pursued charges linked to the alleged use of classified information.

Another case involved Michele Spagnuolo, a Google engineer accused by U.S. prosecutors and the CFTC of using unreleased company search trend data to make about $2.7 million in Polymarket wagers. Authorities alleged that those trades produced about $1.2 million in profit. That matter widened the focus from government and military intelligence to private corporate information.

Geopolitical markets and broader regulation

Geopolitical event contracts have drawn particular attention this year. More than $529 million was traded on Polymarket markets related to the timing of strikes on Iran, with some newly created wallets attracting notice after taking profitable positions ahead of major developments. Six Democratic senators later called on the CFTC to limit contracts tied to death, citing national security and public safety concerns.

At the same time, Polymarket faces pressure outside the United States. France has ordered internet service providers to block the platform, citing unauthorized gambling, inadequate identity checks and market-integrity concerns. The Czech Republic has also restricted access, while European regulators continue to assess whether some event contracts may fall under existing financial rules.

The larger issue is that insider-trading frameworks were largely built for securities markets, while prediction markets often cover politics, war, technology and corporate events. That makes enforcement more difficult, especially when investigators must show not only unusual trading but also a link between specific bets and unlawful use of confidential or classified information.