I just reviewed a quite revealing analysis from Bubblemaps about what happened on Polymarket a little over a month ago. It turns out that six internal accounts made approximately $1.2 million betting that the United States would attack Iran on February 28. The interesting part is how everything points to a suspicious pattern of insider trading.

The wallets were funded just 24 hours before the attack announced by Trump, and they bought massive positions in the prediction market. One account placed over 560,000 shares at 10.8 cents each, investing around $560,000. When the market settled at one dollar, that became a clean profit. Another wallet bought nearly 150,000 shares at 20 cents. All six accounts were created in February and showed no activity beyond these specific bets. The total volume in that contract reached nearly $90 million.

What stands out most is that Bubblemaps identified these wallets were funded through similar routes, suggesting coordination. The attack caused Bitcoin’s price to drop while Hyperliquid oil futures surged, typical of what you see during major geopolitical movements.

This raises a topic that U.S. regulators are increasingly taking seriously: how to oversee insider trading in prediction markets. The platform Kalshi has already suspended and fined users for this. Just this week, they sanctioned a visual effects editor from MrBeast who allegedly traded with insider information about a show’s results. The CFTC has issued clear warnings: insider trading on event contracts can violate the law.

The most absurd part is that there was also a case where traders appeared to engage in insider trading on a market specifically designed to detect insider trading. ZachXBT hinted he would investigate a crypto platform, and someone created a contract on Polymarket betting on who would be named. When he revealed it was Axiom, Lookonchain identified 12 wallets that had already heavily bet on that company. It’s almost comical if it weren’t so concerning.

What I see here is that as prediction markets scale, so does the sophistication of those trying to exploit non-public information. Regulators are reacting, but they’re always a few steps behind. Polymarket and other platforms will need to be much more rigorous in detecting insider trading patterns because these cases are drawing too much attention. It’s a reminder that even in decentralized spaces, asymmetric information remains the most powerful tool.