So there's an interesting story about Polymarket that just happened recently. In short, there was an insider trading investigation conducted by ZachXBT against Axiom, and before the investigation results were published, someone had already made big profits from bets on the Polymarket prediction platform. This is insider trading about insider trading.

The trading volume on the Polymarket market predicting which company would be mentioned in ZachXBT's investigation reached around $40 million since Monday. But the problem is very clear: there is a group of wallets that already knew the answer before the official announcement was made.

On-chain analysis found 12 wallets that placed large bets on Axiom just before the news was published Thursday morning. Their combined profits have already exceeded $1 million. There is even a Polysights data terminal that detected 5 anonymous wallets that collectively invested only $50,000 but managed to earn $266,000 in profit.

The most interesting is a wallet named predictorxyz, which became the largest holder of Yes. They bought 477,415 shares at an average price of $0.14 and are now sitting on a profit of $411,000. That’s a 7x return on the bets made before the answer was published. A second anonymous wallet bought 109,450 shares at $0.33 each. This concentration of ownership is very significant, not a broad market with balanced guesses.

Previously, another market called Meteora, which was leading with over 50% odds. But the odds shifted to Axiom late Wednesday and reached 46.2%. Anyone who bought Axiom shares during the window between the odds change and the Thursday morning publication, either was very perceptive or already knew what was going to happen.

ZachXBT himself admitted on social media that he had contacted Axiom for comments and conducted an interview before publishing. So the leak was probably unavoidable. This means someone at Axiom knew this report was going to be released before it was published. They could have placed bets directly or shared info with others who did.

The problem is that Polymarket doesn’t require identity verification, so it’s hard to trace who is behind these anonymous wallets without cooperation from the platform itself. Axiom said they were shocked and disappointed by these findings, but they did not answer questions about whether they knew any employees were trading on Polymarket.

The irony here is that the prediction market mechanism works exactly as designed. But coincidentally, the system ends up rewarding the subjects of the investigation, not those conducting the investigation.