Key Insights
- •Polymarket trading volume potentially inflated by up to 25%.
- •Study indicates wash trading peaked at 60% in late 2024.
- •Polymarket leadership has not yet responded to the circulating study.
- •MATIC and USDC could experience indirect effects from these allegations.
Columbia University researchers, Rajiv Sethi and Yash Kanoria, have revealed that up to 60% of Polymarket trades may have been inflated through wash trading in late 2024. This report raises significant concerns about trading authenticity, potentially affecting trust in Polymarket and the wider decentralized prediction market sector.
Recent Allegations of Wash Trading
Columbia University researchers allege that approximately 25% of Polymarket’s trades are artificially inflated. The study suggests that these figures spiked as high as 60% in late 2024. Rajiv Sethi, a researcher at Columbia University, remarked, "The share of suspected fake trades peaked at nearly 60% of total weekly volume in December 2024 and has continued through October 2025. Sports and election markets were hit hardest, with some weeks showing over 90% of trades as inauthentic." This claim has gathered industry attention, awaiting Polymarket’s official response.
The study, conducted by Rajiv Sethi and Yash Kanoria, examined on-chain data from Polymarket, raising questions about its integrity. No official statements have been released by Polymarket leadership addressing the wash trading allegations.
Market Reactions and Concerns
Immediate market reactions to the study remain muted, but concern persists among traders and industry observers. Key assets potentially affected include MATIC and USDC, due to their involvement in the trades and settlement process.
The allegations pose potential reputational risks for Polymarket and similar platforms. The study's revelations about wash trading raise serious concerns about the trustworthiness of decentralized finance platforms and could have long-lasting implications. Industry participants await further developments, which could impact the cryptocurrency market's dynamics and trust levels.
Regulatory and Investor Outlook
No regulatory bodies have addressed the study publicly, and institutional investor reactions are also pending. Past instances of wash trading have often led to scrutiny and trust issues in the respective markets, influencing trading volumes.
Historical data suggests that wash trading allegations can harm market trust, leading to investor withdrawal. Future regulatory or auditing requirements could emerge as a consequence, potentially affecting industry standards and trading protocols.