Polymarket is under investigation for suspected wash trading, as it indicates that Donald Trump has a 67% chance of defeating Kamala Harris.
Polymarket, a blockchain-based prediction market, is currently under investigation for claimed cleanse trading on its platform.
The Platform is receiving substantial attention as the 2024 U.S. presidential election approaches, as its odds favor Donald Trump, who presently has a 67% chance of defeating Kamala Harris, according to the platform’s metrics.
Polymarket Accused of Fraudulent Trading
According to a recent report by Fortune, Donald Trump is the leader of the metrics, which has raised concerns about potential market manipulation on Polymarket.
Chaos Labs and Inca Digital, two blockchain analysis firms, investigated and discovered evidence of wash trading in Polymarket’s presidential wagering market.
Wash trading is a type of market manipulation in which the duplicate entity purchases and sells assets to increase the trading volume fraudulently.
Chaos Labs reported that wash trading constituted approximately one-third of the trading volume in the Platform’s presidential market, while Inca Digital identified a “substantial number” of transactions as suspicious.
Both companies suggested that these trading patterns could deceive users regarding the platform’s popularity and volume of specific wagers. Polymarket still needs to address the findings.
Analysts are concerned that these purported practices could erode the confidence in prediction markets, frequently employed as alternative indicators for political outcomes.
Donald Trump winning chances in US presidential election has increased
Polymarket has amassed a significant following since its inception in 2020, particularly during critical events such as the U.S. presidential election. Users can place wagers on real-world events through the Ethereum blockchain-based platform, which is positioned as a source of “alternative data” rather than a politically motivated tool.
Shayne Coplan, CEO of the Platform, underscored this point by asserting, “Polymarket is not about politics.” He further stated that the platform’s objective is to simplify real-world events by utilizing the potential of free markets.
Polymarket’s predictions have impacted media coverage despite its offshore operations. The Wall Street Journal and Fortune have reported its probabilities in conjunction with conventional polling data.
Currently, the Platform indicates that Donald Trump has a 67% chance of winning the presidential election against Kamala Harris, which has sparked controversy regarding the platform’s transparency and accuracy.
This increase in Trump’s prospects is in conjunction with substantial wagers from a single French investor, who reportedly placed $45 million in cumulative bets in support of Trump across multiple accounts.
Differences in the Trading Volume
Chaos Labs and Inca Digital discovered discrepancies between the reported trading volume of Polymarket and the actual on-chain data, in addition to allegations of cleanse trading.
Inca Digital reported that the transaction volume is closer to $1.75 billion, despite Polymarket’s assertion that users have wagered $2.7 billion in its presidential market.
Chaos Labs attributed the disparity to the Platform’s counting shares in U.S. dollars. For example, shares priced at a penny for unlikely outcomes, such as a “yes” wager on Donald Trump for president, may be reported by the platform as $1 in trading volume.
This discrepancy in reporting methodologies has prompted additional inquiries regarding the precision of Polymarket’s data, particularly as the U.S. election approaches. Chaos Labs observed that these practices are prevalent in crypto platforms; however, they risk misrepresenting user interest and market activity to the public.
