U.S. Senator Chris Murphy (D-CT) has launched explosive allegations that individuals with White House access may have used advance knowledge of military strikes on Iran to profit from cryptocurrency-based prediction markets. The senator described this as "a new kind of corruption" and announced plans to introduce legislation banning "destabilizing prediction markets" that allow betting on sensitive government actions.
The allegations center on suspicious trading activity identified by blockchain analytics firm Bubblemaps on the decentralized prediction market platform Polymarket. The firm identified six cryptocurrency wallets that collectively wagered approximately $1.2 million on the outcome "U.S. strikes Iran by February 28, 2026?" just hours before explosions were reported in Tehran. Most of these wallets were funded within 24 hours of the attack and purchased "Yes" shares immediately before the event.
One particularly notable account purchased over 560,000 "Yes" shares at about 10.8 cents each, later receiving a payout of nearly $560,000 when the market settled at $1 following the confirmed strike. According to a New York Times analysis of Polymarket data, more than 150 accounts placed bets of at least $1,000 correctly predicting the American strike, with at least 16 of those accounts each profiting by over $100,000.
Senator Murphy framed the issue as a direct threat to national security, warning that "if we continue to allow people to bet on war, on military strikes, then you're going to have people inside the Situation Room who are making decisions not based on what's good for national security, but based upon whether they'll make money off of war." He added that at a time when Americans are struggling with rising costs for groceries and gas, it is "even more outrageous that there are people inside the White House who are making tons of money."
The controversy comes amid heightened activity in prediction markets. Traders poured $425.4 million into Polymarket's geopolitics markets in the week ending March 1, compared with $163.9 million the week before, according to user-compiled Dune Analytics data. This incident follows similar allegations last month when Israeli authorities charged an IDF reservist and a civilian with using classified military intelligence to place Polymarket bets ahead of Israel's operations against Iran.
The legislative response appears imminent, with Murphy stating he is working on legislation to ban "corrupt and destabilizing prediction markets" where insiders aware of a given outcome "can rig the game to favor certain bets." This effort may find bipartisan support as national security concerns often transcend party lines. The proposed legislation would likely target platforms like Polymarket and PredictIt that offer contracts on political violence or military engagements.
Meanwhile, Polymarket has already taken some responsive measures, pulling a market asking traders to bet on whether a nuclear weapon would be detonated this year after it drew widespread backlash. The White House and Polymarket did not immediately respond to requests for comment on the allegations.
