Over $600m in Polymarket election trades came after races were decided, analysis finds

Left · 2Two global election markets on Polymarket's offshore platform generated over $600 million in trading volume, far more than most political markets typically attract, according to Wired; most of the activity involved contracts tied to long-shot candidates who did not win. 1 2 Left · 2In Ethiopia, Prime Minister Abiy Ahmed's Prosperity Party won 438 parliamentary seats this summer, while the closest competitor won 13. Only $173,000 was wagered on Ahmed winning, against more than $41 million on his chief of staff, Shimelis Abdisa, becoming leader; total volume in the market exceeded $285 million, nearly all on losing candidates. 1 2 Left · 1Chris Park, a former Polymarket trader who runs the forensic analysis firm MSR Decode, said about $284 million of the Ethiopian volume came from pairs of accounts repeatedly buying and selling with each other. Rajiv Sethi, a Barnard College economics professor who researches prediction markets, called it "obviously some form of volume manipulation". 1

Left · 1The Ethiopian market stayed open because Polymarket's rules said it would resolve in October after the prime minister was formally appointed and sworn in. For 123 days after the election, bursts of seemingly irrational trading continued; Sethi calls this a "zombie market". 1 Left · 1A market on Romania's 2024 election showed what Sethi called "even more dramatic" anomalies. The initial election was called off over fears of foreign interference, and Polymarket kept the original market running alongside the new race held months later. A wash-trading detection algorithm built by Sethi and colleagues flagged nearly all its volume as suspicious; he said 99.6 percent of volume in the market for certain weeks was wash trading. 1 Left · 1Wash trading, in which accounts repeatedly trade with each other to create the illusion of heavy activity, is banned on regulated US exchanges and prohibited in Polymarket's terms of service. Sethi cautioned that because trader identities are unknown, uncertainty remains: "What appears to be wash trading isn't always wash trading." 1

Left · 1MSR Decode's analysis for Wired concluded the most likely explanation for the Ethiopian trading is "activity farming", inflating volume in hopes of benefiting if Polymarket launches a crypto token; Polymarket's chief marketing officer Matthew Modabber said in 2025 there "would be a token". Of over 38,000 post-election "trade loops", over 98 percent left neither side gaining or losing money, with a median holding time of nine seconds. 1 Left · 1Shana Bautista, Polymarket's head of global intelligence and investigations, told Wired the team "immediately flagged this activity, investigated, and blocked the accounts from trading". Polymarket did not answer follow-up questions on why the accounts could trade such volume before it acted. 1 Left · 1Wired places the findings in context: Polymarket recently raised over $1 billion in a round led by 1789 Capital, where Donald Trump Jr. is a partner, at an estimated $21 billion valuation, and its growth is often measured by trading volume. Rival Kalshi has also faced scrutiny and denied wash-trading allegations about its crypto perpetual futures market. 1

Left · 1The Commodity Futures Trading Commission, which regulates US prediction markets, declined to comment on whether it is examining these trades. A former CFTC employee told Wired the agency "would want to know about weird activity in a very large market". 1