A group of new accounts on the prediction market Polymarket made notably well-timed bets on the likelihood of a ceasefire between the US and Iran on April 7, resulting in substantial profits. These bets were placed just before a two-week ceasefire was announced, despite escalating rhetoric from President Donald Trump, who had warned on social media that “a whole civilisation will die tonight” if Iran did not comply with his demands regarding the Strait of Hormuz.
Analysis of blockchain data from Polymarket revealed that around 50 accounts placed significant “Yes” bets on the ceasefire just hours before Trump’s announcement on Truth Social at approximately 6:30 pm ET. Interestingly, these accounts had made their first bets that day. One account, created around 10 am local time, wagered nearly AUD 102,264, later cashing out for a profit of AUD 284,032. Another account, registered on April 6 and involved in the same betting event, profited AUD 178,230. A third account, set up shortly before the ceasefire announcement, made AUD 45,314 in bets and earned AUD 68,877.
The timing and success of these bets have raised suspicions that they may be indicative of inside information. Critically, some traders believe that these bets could stem from insights into potential diplomatic manoeuvres or decisions that were not made public at the time. This theory is underscored by previous similar patterns where newly established accounts profited from well-timed bets related to military actions involving Iran and other geopolitical events.
Despite the impressive profits for some, the ceasefire contract was labelled “disputed” by Polymarket, as tensions, such as missile attacks and restrictions on maritime passage in the region, continued. This dispute may take up to 48 hours to settle.
Polymarket allows users to create multiple accounts, making it difficult to track the identities behind the new wallets. While Polymarket itself did not respond to inquiries regarding this matter, concerns have been raised, particularly by Representative Blake Moore from Utah. He pointed out that the trading patterns exhibited by these accounts are likely indicative of insider knowledge, emphasising the need for regulation in prediction markets to prevent unethical trading practices.
Legislators, both Republican and Democrat, have expressed interest in redefining insider trading to include bets made in prediction markets. Industry leaders, like those from Kalshi and Polymarket, acknowledge the necessity for clearer regulations to ensure fair trading conditions for all participants involved. Experts like Todd Philips from Georgia State University argue strongly that the prevalence of insider trading undermines the integrity of the market, highlighting the crucial need for oversight in this emerging sector.