Congress Pushes Ban as Crypto Prediction Markets Raise National Security Concerns
A blockchain investigation has exposed what experts are calling a frightening new dimension of insider trading, one that could be handing U.S. military secrets to foreign adversaries through crypto prediction markets.
Bubblemaps, a blockchain analytics firm, says its team uncovered 80 bets placed on Polymarket that achieved a 98% win rate tied almost exclusively to U.S. military operations against Iran. Nicolas Vaiman, co-founder and CEO of Bubblemaps, told CoinDesk that the pattern is “statistically impossible” to reach through luck alone. Nine connected accounts raked in more than $2.4 million, placing precise, high-conviction bets days before the February 28 surprise airstrikes on Iran, the removal of the country’s supreme leader, and the announcement of a ceasefire.
The Polymarket insider trading concern goes far beyond financial misconduct. Vaiman warned that adversaries watching these markets could read the unusual betting activity as a signal of imminent U.S. action and adjust their own military posture accordingly. “They can make war plans accordingly,” he said. “This could potentially expose the lives of many people.” He noted that during the Iran strikes, some civilians were reportedly checking Polymarket to determine whether to shelter in bunkers, a stark illustration of how seriously people treat the platform’s signals.
The bettors appear to have been strategic about concealment. Bubblemaps’ data shows they also placed smaller losing bets on February 20, likely to blend in and avoid triggering scrutiny, before pivoting to maximize profits across multiple later dates.
This is not the first arrest in connection with Polymarket insider trading. Earlier this year, U.S. Army Green Beret Master Sergeant Gannon Ken Van Dyke was charged after making $400,000 in Polymarket bets tied to the Venezuela raid to extract President Nicolás Maduro, a mission he personally participated in. Separately, a study published in April found that just 3% of so-called “informed” traders were responsible for the accuracy of prediction markets, casting doubt on the notion that the wisdom of the crowd is doing the work.
The revelations have accelerated legislative action in Washington. Representative Mike Levin, who posted on X that the “insider trading problem with prediction markets is bigger than any of us could have known,” has joined Senator Adam Schiff in introducing the DEATH BETS Act, a bill that would ban contracts wagering on war outcomes entirely.
Meanwhile, Polymarket had already made moves to address the growing scrutiny. In late April, the platform announced a partnership with Chainalysis to bring what it described as Wall Street-level compliance oversight to its operations, combining AI-powered surveillance with blockchain forensics to flag suspicious activity. In a previous statement carried by CBS News, Polymarket was direct: “Insider trading is not welcome on Polymarket, and those who attempt it will be identified.”
Vaiman, for his part, stopped short of placing the blame squarely on Polymarket’s shoulders. He acknowledged the structural challenge facing any open platform. “Realistically, anybody can use a cheap VPN or buy a KYC’d account,” he said. “That is not just a Polymarket problem. It is an internet-wide problem.” Bubblemaps first published their findings publicly on May 18 via a thread on X, complete with charts and onchain data illustrating what they describe as the statistically impossible precision of each bet.
Still, Vaiman raised an even more unsettling possibility: that prediction markets could be weaponized not just to leak secrets, but to manufacture them. A government, he suggested, could deliberately place misleading bets to send false signals to enemies, turning platforms like Polymarket into full-blown instruments of information warfare. “Prediction markets are intelligence and information warfare tools,” he said flatly. “They can change the future, not just predict it.”
As Congress deliberates on the DEATH BETS Act and federal investigators continue probing Polymarket insider trading patterns, the question is no longer just about market fairness. It is about whether decentralized crypto platforms have inadvertently become a liability to national security, and who, if anyone, is responsible for closing that gap.
