Researchers at Stanford University and Singapore Management University have identified trading patterns that may suggest manipulation in Polymarket, a prediction-market platform where every trade is recorded on a public blockchain. After examining roughly 16,000 five-minute Bitcoin (BTC-USD) contracts over two months, the researchers found repeated bursts of one-sided trading on Binance, the world's largest cryptocurrency exchange, shortly before the bets closed. These trades temporarily moved Bitcoin's price in the same direction as positions that later paid out on Polymarket. The activity was most concentrated when the contracts were nearly evenly balanced before settlement, with Binance order flow jumping to about 3.9 times the level recorded during other settlement periods. The researchers described the pattern as a temporary effort to move the spot price, although the study did not prove who placed the trades or whether the participants intended to manipulate the market.
The researchers classified the 10% of settlement periods with the most unusual Binance activity as those most likely to contain a manipulative price push. Based on that method, they estimated that traders identified as likely manipulators earned about $8.2 million over two months, largely at the expense of participants classified as retail or other traders. The unusual activity appeared more frequently overnight and on weekends, when thinner trading volumes may allow smaller trades to influence Bitcoin's price more easily. Polymarket's five-minute contracts used pricing information collected from multiple oracles, but the researchers found that the contracts settled in the same direction as Binance about 85% of the time during the study period. Allium, a crypto analytics firm, said the trading pattern appeared credible, while noting that the research did not establish whether the Binance traders moving the price were connected to the Polymarket accounts receiving the winnings.
Polymarket said it uses multiple independent pricing oracles and is considering shifting certain markets during the next year toward settlement methods based on prices measured over longer periods rather than at a single moment. The researchers found little evidence of similar activity in 15-minute Bitcoin markets, suggesting that longer settlement windows could make the outcome more difficult to influence. The findings may also matter beyond cryptocurrency as Cboe Global Markets (CBOE), an exchange operator introducing prediction contracts linked to the S&P 500, expands into the market, while Nasdaq NASDAQ:NDAQ, a stock exchange operator, seeks approval for similar products. Cboe said its contracts differ because they are tied to a broad stock index and operate under the U.S. securities regulatory framework. Investors may view the research as evidence that settlement design and market oversight could become increasingly important as exchanges introduce more prediction products linked to tradable financial assets.