Inside $170M Iran ceasefire bets: Polymarket faces scrutiny

A surge in betting activity tied to a potential ceasefire between the United States and Iran has drawn intense scrutiny to prediction markets, with more than $170 million flowing through Polymarket in one of the largest geopolitical wagers in the sector’s history.

The episode has reignited concerns about insider trading risks and the ability of platforms to resolve contracts tied to complex real-world events, even as user participation continues to grow rapidly.

Suspicious trades raise insider concerns

A series of well-timed wagers placed by newly created anonymous accounts has fueled speculation about whether some traders may have acted on privileged information.

Blockchain analytics firm Lookonchain identified three such accounts that generated more than $480,000 in profits by betting on a ceasefire by April 7 and exiting positions at elevated prices.

Separately, blockchain forensics firm Bubblemaps SA flagged another set of trades that earned more than $560,000, with accounts that had previously predicted attacks on Iran placing fresh bets on a truce.

“We cannot say for certain that these accounts are insiders,” Bubblemaps said in a social media post. “Still, their track record of correctly calling surprise attacks on Iran suggests they may have access to better information than most.”

Despite these findings, most evidence remains circumstantial, with no definitive proof linking trades to insiders.

An academic study by Columbia Law School and the University of Haifa found transactions consistent with potential use of nonpublic information that generated around $143 million in profits over two years, though researchers cautioned that timing alone does not confirm insider access.

Disputes highlight structural challenges

Beyond trading concerns, the Iran-linked contracts have exposed difficulties in settling prediction market outcomes.

Payouts on some Middle East-related bets have been frozen as traders dispute whether the current agreement qualifies as a ceasefire under Polymarket’s rules.

The April 7 contract remains unresolved, with total trading volume exceeding $60 million and participants awaiting a decision that could take several days.

On the platform, users propose outcomes by posting collateral, and disputes are resolved through a vote by holders of the UMA cryptocurrency, often accompanied by public debate in online forums.

Disagreements have centered on whether the agreement represents a “temporary tactical stand-down” or a formal ceasefire. Statements from Iranian officials, including comments from foreign minister Abbas Araghchi about halting “defensive operations,” have further complicated interpretations.

At the same time, other contracts with later ceasefire deadlines have already been resolved in favor of a truce, adding inconsistency to the process.

Rapid growth attracts scrutiny

The controversy comes amid rapid expansion in prediction markets.

Polymarket recorded 45.3 million web visits in March, up from 40 million in November 2024 and nearly 400% higher year-over-year, according to Similarweb data.

Its rival Kalshi also saw strong growth, with 13 million visits in March, nearly double its November 2024 figures.

Interest in geopolitical betting has surged alongside the Iran conflict, as users increasingly turn to these platforms to speculate on real-world events ranging from elections to military developments.

However, the growth has attracted regulatory attention, particularly as Polymarket operates outside the United States and offers contracts tied to sensitive geopolitical developments.

Both Polymarket and Kalshi have taken steps to address insider trading concerns by tightening rules and partnering with third-party monitoring firms.

Still, the combination of anonymous trading, complex event resolution, and rising volumes suggests that prediction markets are entering a critical phase, where their credibility and long-term viability may depend on how effectively they address these emerging risks.