Polymarket rife with ‘artificial trading,’ Columbia University researchers find

The accelerated maturation of the prediction marketplace Polymarket whitethorn not beryllium wholly integrated but alternatively inflated by artificial trading activity, according to probe published by Columbia University.

In an 80-page insubstantial titled “Network-Based Detection of Wash-Trading,” which has not yet undergone adjacent review, Columbia researchers identified extended wash-trading enactment connected Polymarket opening successful July 2024. That month, they recovered that lavation trades accounted for astir 60% of the platform’s full trading volume.

“This enactment persisted done precocious April 2025 earlier subsiding substantially, and erstwhile again accrued to astir 20 percent of measurement successful aboriginal October 2025,” they wrote. 

The researchers determined that 25% of Polymarket’s full trading measurement implicit the past 3 years was attributable to artificial trading.

One of the paper’s co-authors, Columbia University prof Yash Kanoria, told Bloomberg, “I’m hopeful that Polymarket volition invited the investigation successful our paper.” The authors allege that Polymarket was mostly liable for the lavation trading, citing the operation of its operations arsenic a contributing factor.

Cointelegraph reached retired to Polymarket for remark but had not received a effect astatine clip of publication.

An abstract of “Network-Based Detection of Wash Trading,” published connected Thursday. Source: SSRN

Wash trading — a signifier successful which the aforesaid trader buys and sells the aforesaid plus to make a mendacious content of marketplace enactment — is amerciable successful the United States due to the fact that it manipulates prices and misleads investors astir a market’s existent request and liquidity.

Wash trading allegations are not a caller improvement successful the cryptocurrency industry. In 2023, a study by Solidus Labs claimed that decentralized exchanges were peculiarly rife with lavation trading. The study recovered that, based connected an investigation of 30,000 Ethereum-based decentralized speech liquidity pools, astir 70% had engaged successful lavation trading implicit a three-year period.

Related: Crypto steadfast pleads blameworthy to lavation trading FBI-made token

Wash-trading allegations formed a shadiness connected the emergence of prediction markets

The latest lavation trading allegations formed a shadiness implicit the accelerated ascent of Polymarket and the broader blockchain-based prediction marketplace sector. 

These markets gained prominence during the 2024 US statesmanlike predetermination rhythm for accurately forecasting the outcome. Polymarket’s surge successful popularity positioned it to prosecute a reported $10 cardinal valuation amid rumors of a large backing round.

Polymarket has emerged arsenic 1 of the starring decentralized prediction platforms, allowing users to stake connected real-world events without relying connected a cardinal bookmaker.

Polymarket’s monthly progressive traders. Source: Dune

As Cointelegraph precocious reported, Polymarket has been preparing to re-enter the US marketplace successful November, conscionable months aft the Commodity Futures Trading Commission (CFTC) issued a no-action letter to a clearinghouse the institution acquired.

Related: Kalshi, Polymarket traders stake Supreme Court volition curb Trump’s tariff powers