Over $1.2 million in profits pocketed by a group of crypto wallets tied to an onchain investigation into decentralized finance platform Axiom has reignited concerns over possible insider trading in prediction markets. Suspicious trading patterns have thrown a spotlight on the vulnerabilities of blockchain-based betting platforms when it comes to the use of nonpublic information.
Insider Trading Suspicions Surface in Onchain Analysis
According to blockchain researcher Defioasis, analysis of Polymarket—an influential prediction market—identified that eight of the ten most profitable wallets could have benefited from insider knowledge. Researchers highlighted three wallets in particular that exclusively traded on this single market, each making over $100,000. The lack of prior trading activity elsewhere only deepens suspicions that these addresses might have had privileged access, possibly tipping the scales in their favor.
Axiom Faces Scrutiny Amid Probing and Allegations
The controversial Polymarket contract became the focus of a far-reaching investigation announced by blockchain detective ZachXBT. This inquiry centered on allegations that Broox Bauer, a staff member at Axiom, and several associates had traded using confidential information that extended into early 2025. In response to these revelations, Axiom’s management voiced surprise and disappointment at the findings, announcing that they had disabled internal tools allegedly utilized for gaining unauthorized knowledge.
Defioasis observed, “There are strong indicators that three addresses—each exclusively trading this market and making upwards of $100,000—were acting with inside knowledge.”
The eight addresses with the largest profits amassed $1.2 million, according to onchain activity. Conversely, over fifty different wallets collectively recorded losses totaling $1.23 million, including two notable addresses that each lost nearly $366,000. These stark discrepancies in outcomes have further fueled concerns about potential market manipulation and unfair advantages.
Prediction Markets Spur Calls for Regulatory Reform
The Axiom-related investigation has rekindled the debate on insider trading risks within the world of prediction markets. Notably, earlier this year another Polymarket user was reported to have extracted significant gains by betting on the outcome of Venezuelan President Nicolás Maduro’s removal, mere days before the event became public. Such episodes highlight broader questions about whether betting platforms can adequately guard against clandestine trades.
In light of mounting concerns, Tarek Mansour, CEO of U.S.-based prediction market Kalshi, voiced his backing for a new legislative proposal that would bar government officials from trading on such platforms. The move aims to prevent individuals with privileged knowledge from influencing or benefiting from market outcomes.
Meanwhile, Polymarket continues to face regulatory headwinds in several jurisdictions. Authorities in Hungary, Portugal, and Ukraine have cut off local access due to fears about unlicensed operations. Previously, regulators in France, Belgium, Poland, Singapore, and Switzerland imposed similar restrictions, further limiting the platform’s footprint.
