Polymarket Faces Wash Trading Claims Days Before U.S. Election

Days before the U.S. presidential election, Polymarket faces scrutiny over potential wash trading on election odds.

Donald Trump in the foreground with an energy sphere around his fist, as Kamala Harris watching it from the background.
Created by Gabor Kovacs from DailyCoin
  • Polymarket accused of wash trading. 
  • Election betting odds are in question. 
  • US election put Polymarket in the mainstream. 

With the United States presidential election just days away, the spotlight on polls and prediction platforms has intensified. This has brought Polymarket into the mainstream, with users investing billions into bidding on the election winner. Currently, former President Donald Trump leads, with the odds 67% in his favor. 

While Polymarket claims its bets are transparent, recent investigations have cast doubt on its metrics. Investigators claim they found evidence of wash trading, artificially boosting the volume. This is especially concerning due to Polymarketโ€™s potential effect on the US election.ย 

Wash Trading Concerns in Polymarketโ€™s Election Predictions

Just five days ahead of the election, prediction platform Polymarket is facing scrutiny over its election bets. On Thursday, October 31, independent investigations by Chaos Labs and Inca Digital analytics firm recovered potential manipulation. 

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The analysis suggests that Polymarket may see โ€œwash tradingโ€ in the election bets. Wash trading is placing a high volume of transactions without real market intention to inflate trading volume and activity artificially. This practice is concerning, as it can skew prediction odds.ย 

Polymarketโ€™s bet on the US election winner shows a 67% chance of victory for Donald Trump. This prediction attracted over $2.7 billion in trading volume, supposedly showing real engagement. However, Chaos Labsโ€™ investigators claim that around one-third of this volume could be due to wash trades. Inca Digitalโ€™s analysis showed similar results, suggesting that a โ€œsignificant portionโ€ of the bets show signs of wash trading.ย 

Whales Betting Big on Trump

Recent wash trading allegations were not the first time Polymarket attracted scrutiny. For one, election polls show a much tighter race than Polymarketโ€™s betting odds. At the same time, reports revealed several โ€œwhaleโ€ accounts betting millions on Trump. 

Polymarket even issued a statement on these whale trades, totaling $50 million. According to the company, these accounts, Fredi9999, Theo4, PrincessCaro, and Michie, are connected to a French billionaire. Polymarket did not reveal the name of the person pouring millions into US election bets.ย 

Earlier, Polymarket brushed off whale concerns, claiming the platform is transparent. Still, allegations of wash trading and whale activity raise serious concerns due to its potential influence on the election.ย 

On the Flipside

  • There is also a risk of bias with crypto betting platforms. The platform appeals to crypto traders, who are not representative of the entire public.ย 
  • The potential for foreign individuals or governments to influence the US election has been in the spotlight before. In the 2016 election, allegations surfaced of Russian involvement, and the FBI released a report about it.ย ย 

Why This Matters

Polymarketโ€™s allegations of wash trading are concerning due to its potential influence on public opinion. Perceptions of the electionโ€™s outcome could shape voter confidence, potentially affecting the actual election. 

Read more about Polymarket betting: 
Polymarket Betters Are Overwhelmingly Losing Money: Hereโ€™s Why

Read more about Binanceโ€™s use of AI: 
Binance to Use AWS Generative AI to Boost User Experience

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is DailyCoinโ€™s journalist, focusing on Solana and crypto exchanges. David currently doesnโ€™t hold any crypto.

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