Polymarket adds Chainalysis tools to detect insider trading

Polymarket is partnering with Chainalysis to add new detection tools aimed at identifying insider trading and suspicious activity on its blockchain based prediction market, Bloomberg reported.

The tools include a detection model built to surface trading patterns consistent with insider knowledge in prediction markets, along with systems to support evidence collection for law enforcement and regulators.

The partnership also adds more protection against cybersecurity threats, expanding Polymarket’s effort to show that its public, onchain trading data can be used for enforcement rather than just speculation.

The move follows several insider betting cases that have intensified scrutiny of prediction markets. This week, a US soldier pleaded not guilty after prosecutors accused him of earning more than $400,000 from Polymarket bets tied to classified information about Nicolás Maduro’s removal. The CFTC also filed a civil complaint alleging insider trading.

Polymarket said it cooperated with authorities. The case is an early test of how regulators will treat prediction markets as they expand into finance, sports, politics, and geopolitical events.

The Chainalysis deal follows Polymarket’s March partnership with Palantir and TWG AI to monitor sports contracts. Together, the deals show Polymarket building a broader compliance stack as insider trading scrutiny grows.

Neal Kumar, Polymarket’s chief legal officer, said the platform’s public structure makes suspicious activity easier to spot because every offshore exchange transaction is visible onchain. That transparency helps researchers track unusual wallets, but anonymous trading still creates room for users with privileged information to move first.

Polymarket updated its rules last month to ban trades based on stolen confidential information, illegal tips, and wagers by people who can influence an event’s outcome.