Election Betting Odds Manipulated to Favor Trump [View all]
The prediction market Polymarket has skyrocketed into mainstream consciousness during the 2024 U.S. elections, with the platform reporting that users have placed $2.7 billion in bets over whether Donald Trump or Kamala Harris will be elected president in early November.
But analysts at two crypto research firms have found evidence of rampant wash trading on Polymarket, even as its odds have been shared widely across social media and mainstream media outlets. Donald Trump currently has a 67% chance of winning, according to the platform.
In separate investigations completed by the blockchain firms Chaos Labs and Inca Digital and shared exclusively with Fortune, analysts found that Polymarket activity exhibited signs of wash trading, a form of market manipulation where shares are bought and sold, often simultaneously and repeatedly, to create a false impression of volume and activity. Chaos Labs found that wash trading constituted around one-third of trading volume on Polymarket’s presidential market, while Inca Digital found that a “significant portion of the volume” on the market could be attributed to potential wash trading, according to its report.
“Polymarket’s Terms of Use expressly prohibit market manipulation,” a Polymarket spokesperson said in a statement shared with Fortune after publication. “We strive to provide users with the fairest analysis possible and our transparency allows the market to decide.”
The rise of prediction markets
Founded in 2020 and backed by VCs including Peter Thiel’s Founders Fund, Polymarket tried to launch electoral betting in the U.S. before being forced offshore by the Commodity Futures Trading Commission in early 2022.
https://fortune.com/crypto/2024/10/30/polymarket-trump-election-crypto-wash-trading-researchers/
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