Polymarket Linked To Wash Trading Amid Trumps Shocking Lead

As of writing, Trump is leading with 64.5% against 35.6% for Kamala Harris. However, Fortune reported, citing blockchain research firms Chaos Labs and Inca Digital, that the platform may be affected by wash trading. This has cast doubt on the accuracy and legitimacy of Polymarkets odds.

“This is in stark contrast to traditional polling data, which puts him 49% to 50%,” one X user said.

Read More: How To Use Polymarket In The United States: Step-by-Step Guide

The research reportedly found substantial evidence of wash trading on Polymarket. Wash trading is a manipulation tactic where users repeatedly buy and sell assets to create an artificial impression of volume. Increasing perceived activity inflates confidence in a particular prediction, potentially swaying public opinion or incentivizing additional betting.

Chaos Labs‘ analysis estimated that approximately one-third (or 33.33%) of Polymarket’s trading volume in the presidential election market results from wash trading. Inca Digital reported similar findings, concluding that “a significant portion” of trading activity appeared to be manipulative. Both firms articulated that the extent of wash trading raises questions about the platforms reliability as an electoral barometer.

Further concerns have arisen over discrepancies in Polymarkets reported trading volume for the presidential election. Although Polymarket claims $2.7 billion in bets, Chaos Labs and Inca Digital found that the real on-chain trading volume appears closer to $1.75 billion. Chaos Labs attributes the difference to how Polymarket calculates traded volume.

“Only $90 million of wagers on Kalshi, yet theres $2.5 billion on Polymarket. I am curious if there is a restriction on appointing market makers that will offer two-way quotes under the relevant law,” another user quipped.

Reportedly, the platform presents shares as dollar-denominated units. However, these figures often do not align with actual transaction values on the blockchain. For instance, a share priced at $0.01 for a low-probability event might be reported as a full dollar in volume, inflating the perception of activity.

Polymarket Emphasizes Transparency and Neutrality

In response to increased scrutiny, Polymarket has implemented additional measures to curb potential manipulation. As BeInCrypto reported, the platform has begun tightening user verification protocols, particularly for high-volume traders, in response to suspicions about unusual patterns.

The prediction market also insisted that its platform remains neutral but admitted that recent activity from certain accounts has prompted heightened monitoring. This was after suspicions that a single French trader, Fredi9999, may have skewed Trumps odds.

Polymarket also denied bias, citing its offshore status and blockchain architecture as mechanisms to ensure fairness. According to a company representative, Polymarkets independence from US regulatory oversight allows it to operate without external pressures. Similarly, the spokesperson articulated that blockchain transparency allows users to verify transaction data and hold the platform accountable.

“Polymarkets Terms of Use expressly prohibit market manipulation. We strive to provide users with the fairest analysis possible, and our transparency allows the market to decide,” Fortune reported, citing an unnamed individual.

Elsewhere, prediction markets promise an alternative means of gauging public opinion, particularly when traditional polling faces challenges. For Polymarket, success has come with significant hurdles. ne ofis the Commodity Futures Trading Commission (CFTC), which has moved to limit similar platforms within the US.

The recent court ruling favoring Kalshi‘s legal operation in the US, as well as Robinhood’s recent foray into the space, highlights the growing interest and perceived value of prediction markets in American politics. However, these platforms must contend with the risks of manipulation, which can distort market signals and erode public trust.

Omer Goldberg, founder of Chaos Labs, expressed hope that identifying and mitigating wash trading would bolster credibility for prediction markets. He acknowledged that if these platforms are to serve as reliable indicators, they must be rooted in genuine, organic trading activity rather than “inorganic flow.”

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