Polymarket has investigated dozens of bets on U.S. midterm election markets over possible insider trading and market manipulation, according to Shana Bautista, the company’s head of global intelligence and investigations. At least two of those cases have been referred to the Commodity Futures Trading Commission, NPR reported, citing a person familiar with the probes.
Bautista, a former FBI official and crypto analyst who joined Polymarket in June, said her team of 16 specialists is policing election bets with a new surveillance system ahead of the November 3 vote. The system draws on data from social media, Federal Election Commission filings, crypto companies, banking partners and statistical models, and generates hundreds of alerts per day.
“If you have information that you have a duty to protect, don’t trade on it,” Bautista said. “It’s explicitly against our terms of use on both platforms, but also is against the law. If you decide that you are smarter and can do it, we will find you.”
The monitoring covers both Polymarket’s U.S.-regulated exchange, where identity verification is required, and Polymarket International, where users can trade anonymously with crypto. Bautista noted that blockchain transactions are rarely fully anonymous, saying there has never been a case where potential traders could not be identified.
Barnard College economics professor Rajiv Sethi told NPR that election markets are especially vulnerable because they can become a self-fulfilling prophecy, with perceptions of a candidate’s momentum potentially influencing results.
Polymarket’s main rival Kalshi has also increased scrutiny, launching its own FEC-based system in May and adding employment disclosures for high-risk markets. Kalshi said it opened more than 150 investigations during the year and referred more than 20 cases to authorities. Election insider trading drew attention after campaign staffers admitted making thousands of dollars by betting on their own candidates using unreleased poll information.
In April, Polymarket partnered with blockchain analytics firm Chainalysis on market surveillance tools, days after an active-duty U.S. Army soldier was charged with using classified information about the raid to capture Nicolás Maduro to bet on Polymarket. The soldier allegedly placed more than $33,000 in bets and won nearly $410,000.
NPR also reported that the CFTC has done relatively little to police prediction markets, leaving much of the work to companies themselves. In September, CFTC staff warned that so-called mention markets should be presumed susceptible to manipulation.
