The blockchain-based prediction platform Polymarket has come under scrutiny as the 2024 U.S. presidential elections approach, facing allegations of wash trading. According to the platform’s data, Donald Trump has a 67% probability of winning against Kamala Harris.
Allegations of Wash Trading
A recent report by Fortune raised concerns about potential market manipulation by Polymarket in the election betting market. Two blockchain analysis firms, Chaos Labs and Inca Digital, found evidence of wash trading activities on the platform’s election prediction market.
Wash trading is defined as artificially increasing trading volume by buying and selling the same asset. Chaos Labs reported that approximately one-third of the trading volume in Polymarket’s election market occurs in this manner. Inca Digital noted that a “significant portion” of the transactions appeared suspicious.
Increase in Trump’s Probabilities
Since its establishment in 2020, Polymarket has gained a substantial following, especially during major events. Operating on the Ethereum 
$2,647 network, the platform allows users to make predictions about various events, positioning itself as a source of “alternative data.”
“Polymarket is not about politics. Its goal is to use the power of the free market to clarify real-world events.” – Polymarket CEO Shayne Coplan
In addition to the wash trading allegations, Chaos Labs and Inca Digital also found inconsistencies between the reported trading volumes on Polymarket and actual data on the network. According to Polymarket, users are making $2.7 billion in predictions in the election market, while Inca Digital reported that the real trading volume is around $1.75 billion.
Chaos Labs indicated that this discrepancy arises from Polymarket’s method of counting shares in U.S. dollars, raising further concerns about the accuracy of the platform’s data.
These practices could undermine trust in prediction markets like Polymarket and lead users to question the reliability of the platform’s data. Polymarket has yet to release an official statement regarding these findings.
