A lucrative betting surge on a Polymarket contract linked to an onchain investigation has ignited fresh debates about potential insider activity within decentralized prediction markets. Trading data reveals that a small cluster of crypto wallets secured profits exceeding $1.2 million by wagering on outcomes related to an exposé about the decentralized finance (DeFi) trading platform Axiom.
Analysis from onchain data platform Dune shows that the eight most profitable wallets for this specific market collectively earned approximately $1.2 million. Conversely, the same dataset indicates that more than 50 wallets suffered combined losses of roughly $1.23 million, with two individual accounts losing about $366,000 each.
Onchain researcher Defioasis, citing transaction patterns, identified significant red flags. “There are 3 addresses that achieved profits exceeding $100,000, all of which are insider addresses that traded only this single market,” the researcher stated in a Friday post on X. Defioasis further noted that eight of the top ten most profitable wallets exhibited onchain behavior consistent with insider addresses.
The betting frenzy preceded the public release of a highly anticipated investigation by the pseudonymous onchain investigator ZachXBT. Published on Thursday, the report alleged that Axiom employee Broox Bauer and associated actors engaged in systematic insider trading activity starting in early 2025. The investigation detailed how non-public information regarding Axiom’s operations may have been used to gain an unfair advantage in various markets.
In response to the allegations, Axiom issued a statement on X expressing that it was “shocked and disappointed” by the findings. The platform confirmed it has already revoked access to the specific tools implicated in the alleged insider trading scheme.
Prediction markets raise insider trading allegations
This incident compounds existing regulatory and ethical concerns about information asymmetry in prediction markets. Earlier in January, a separate Polymarket bet drew intense scrutiny after a user profited by around $400,000 on a contract predicting the removal of Venezuelan President Nicholas Maduro. That wager was placed just hours before U.S. forces captured him in a military operation, suggesting the bettor possessed advance, non-public knowledge of a major geopolitical event.
The Maduro case has already spurred legislative action. U.S. lawmakers have proposed new rules aimed at restricting political prediction market trading by government officials, highlighting a growing political will to address potential abuses in the sector.
Polymarket faces growing regulatory scrutiny on gambling concerns
Beyond insider trading, Polymarket—the largest decentralized prediction market—is enduring a wave of regulatory pressure based on gambling statutes. Multiple countries have moved to block or restrict access to the platform, asserting that its operations constitute unlicensed gambling.
In January alone, Hungary and Portugal implemented blocks, citing prohibitions on forbidden gambling activities. This followed Ukraine’s earlier move to restrict Polymarket, classifying its services as illegal gambling under national law. The platform has also faced similar restrictions or blocks in France, Belgium, Poland, Singapore, and Switzerland, reflecting a coordinated international regulatory response.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy.
