Polymarket is enhancing its user verification procedures following a surge in cryptocurrency predictions for the upcoming U.S. presidential election. The platform checks users who have placed substantial wagers to ensure they are based outside the U.S., as U.S. residents are not allowed to access the network. The surge in interest in Polymarket’s U.S. political markets is linked to a few accounts that have wagered millions on Trump’s chances of winning the presidency.
Polymarket, a popular betting platform, has seen over $18 million in bets on Republican outcomes, with $13 million focusing on the platform’s main presidential market. Fredi9999, now the platform’s biggest and most lucrative bettor, has placed bets on the US presidential election, with trade activity of almost $2.2 billion so far. However, Polymarket faces challenges such as crowdsourced polling and manipulation by “whales” as more people pay attention to its forecasts.
Trump’s Vast Lead Raises Questions About Manipulation
Polymarket has a 64.2% chance of a Trump victory compared to PredictIt and Kalshi’s 59% and 60% projections, respectively. This discrepancy is significant when compared to actual polls, where Trump is 49.3% ahead of Democratic opponent Kamala Harris by 48.5%. Market manipulation claims have been raised due to the surge in Trump wagers, with only four accounts spending about $30 million on Trump-related wagers, including Fredi9999.
Arkham Intelligence CEO Miguel Morel believes three accounts, Fredi9999, Theo4, PrincessCaro, and Michie, created between June and October, are run by the same company. The accounts share similar betting habits and were financed by the same cryptocurrency exchange, leading to rumors of market manipulation. Blockchain detectives using the nicknames FozzyDiablo and Domahhhh have hypothesized that Fredi9999 and three other accounts may be under the control of the same person.
Is it strategic betting or manipulation?
Analysts suggest that the recent surge in Trump wagers on Polymarket may be more than a mere manipulation attempt, despite concerns about market manipulation. Economist Rajiv Sethi, who studied market manipulation during the 2012 presidential election, believes that if someone were attempting to influence the market, they would likely do so similarly to Polymarket.
The significant bets on Donald Trump’s campaign may be a calculated hedge by those who profit from a Trump win. Political strategist Tom Bonier suggests that Trump bets may be part of a coordinated effort to shape public perception in the final stretch of the election. Crypto investor Adam Cochran suggests that the betting surge might support Trump’s narrative of strength, making claims of a “stolen” election more credible if he loses to Harris.
The Lawsuit Issues at Polymarket
Polymarket, a platform that offers trading services in the US, has been attempting to block US users from participating in its markets due to legal challenges. The platform received a fine from the CFTC in early 2022 for providing unlawful trading services in the United States. Despite these measures, some US traders have managed to circumvent the platform’s restrictions using virtual private networks.
Polymarket, a prediction market, has faced competition from rival platform Kalshi, which won a legal battle against the CFTC, allowing it to offer local derivatives contracts tied to the U.S. presidential election outcome. Social media platforms offer tutorials on bypassing Polymarket’s geoblocking measures, allowing some American traders to access the platform and place bets.
The Bottom Line
The rise in Trump’s winning odds on Polymarket has raised concerns about potential manipulation. The platform has scrutinized its largest wagers to ensure they are not based in the U.S. Polymarket is a new way of betting on global affairs, but it raises questions about whether wealthy participants are manipulating the market and public sentiment.
