Polymarket insider – The CFTC says it is using AI, pattern analysis and crypto tracing to target suspected insider trading tied to Polymarket and other prediction markets.
The US is putting artificial intelligence to work in an effort to root out insider trading connected to Polymarket, as regulators warn that offshore prediction markets are not beyond scrutiny.
For much of the past year, prediction markets promised a new kind of entertainment and investment.. On Polymarket. traders allegedly profited from bets timed around major geopolitical developments. including a raid on Venezuela and the Iran War.. Yet the platform’s crypto-based. offshore structure left some room for doubt about whether US authorities would move against the most blatant offenders.
That uncertainty is now being challenged by the Commodity Futures Trading Commission. which says it is actively looking for suspicious trading patterns by users in the United States who attempt to access offshore markets using virtual private networks.. Michael Selig, the CFTC chairman, told WIRED this week that the agency intends to bring enforcement actions.
“We’re going to find them, and we’re going to bring actions,” Selig said, speaking from the CFTC’s headquarters in a Washington, DC, office park called Patriots Plaza II.
The CFTC’s push is arriving at a moment when scrutiny of prediction markets has intensified.. In March. Connecticut senator Chris Murphy told WIRED that he suspected White House staffers were engaged in insider trading on war-related contracts.. At the beginning of April. seven members of Congress asked the CFTC to investigate overseas markets selling war-themed event contracts. arguing that the commission had the authority and responsibility to curb insider trading. particularly on what they called “morally obscene” trades related to military action.
Selig also told Congress that the CFTC is pursuing “hundreds, if not thousands” of insider trading tips.
To handle the growing volume of cases, the commission says it is staffing up and leaning into automation.. In Selig’s description, the agency is using tools to analyze trading activity and flag potential market manipulation.. He said the challenge is largely about scale: there is a lot of information. and regulators need help sorting signal from noise.
“You’ve got so much data,” Selig said. “When we feed it into AI, we get really great information.” He added that the output can guide where investigators should focus and when a subpoena might be warranted.
The CFTC’s approach combines proprietary systems and third-party technology.. The agency said it uses third-party blockchain tracing tools such as Chainalysis for crypto platforms.. For centralized markets, it also uses market abuse detection software including Nasdaq Smarts.. Beyond naming those tools. the CFTC did not specify which other AI products it uses. and declined to share additional examples.
Regulators are not operating in isolation.. Major prediction market companies have been publicly emphasizing their own compliance efforts as political and public attention grows.. US-based exchange Kalshi. Polymarket’s primary competitor. said it has suspended and penalized customers flagged for insider trading and market manipulation.
Polymarket itself has also adjusted its posture.. After backlash over suspected insider trading. it announced in April a partnership with Chainalysis as part of a broader crackdown on market manipulation.. The company’s CEO. Shayne Coplan. had previously discussed why insider trading could be beneficial for prediction markets. but Polymarket said it was changing course this spring.. It updated its market integrity rules and announced a partnership with Palantir for its US-based sports markets.. The Chainalysis partnership, however, focuses on the offshore platform.
Polymarket did not respond to WIRED’s request for comment.
Chainalysis. for its part. said it analyzes the same data for both its clients. and that its role is to make that information more usable for investigations.. Maddie Kenney. a Chainalysis spokesperson. said the company organizes trading-related data and attaches attributions and insights developed over years in the space.
“The value Chainalysis adds for our customers, including Polymarket and the CFTC, is organizing the data and enriching it with the attributions and insights we’ve accumulated over years in the space,” Kenney said.
The CFTC’s warning about AI-enabled enforcement is a direct response to concerns that offshore platforms can exploit jurisdictional gaps.. With Polymarket’s crypto access blocked stateside. regulators are describing a new priority: identifying traders in the US who try to reach the platform anyway. including by routing through VPNs. then using automation and tracing to connect suspicious behavior to actionable cases.
CFTC Polymarket insider trading AI enforcement crypto tracing Chainalysis prediction markets