Research Found Predictions Platform Polymarket Volume Inflated by ‘Wash Trading’

A Columbia University study revealed that nearly 25% of Polymarket’s trading volume over the past three years resulted from artificial wash trading. The crypto prediction market platform faces scrutiny over inflated transaction data.

The volume of activity on Polymarket has been significantly inflated by so-called wash trading in which users rapidly buy and sell the same contracts, according to a new study by Columbia University researchers https://t.co/kWTEDPn6IS

— Bloomberg (@business) November 7, 2025

Researchers found wash trading prevalence varied across market categories. Sports markets showed 45% of all-time volume from wash trades, while election markets registered 17%, politics markets 12%, and crypto markets 3%.

The study clarified that Polymarket itself did not conduct wash trading. However, the platform’s crypto-based structure may have enabled such activity to occur.

A Polymarket representative told Bloomberg on Friday that the platform is reviewing the study. The company offered no immediate comment on the findings.

Polymarket Under Academic Scrutiny Over Market Integrity

Yash Kanoria, a Columbia University business school professor and study co-author, expressed optimism about the platform’s response. He told Bloomberg he hopes Polymarket will welcome the analysis presented in the research paper.

“Wash trading doesn’t add liquidity or information to the market”

Kanoria stated

He emphasized the value of distinguishing authentic volume from inauthentic activity.

Polymarket reached record highs in October for volume, active traders, and new market launches. The platform’s trading volume hit an unprecedented $2.59 billion that month, coinciding with its native token launch.

Independent tracking indicates Polymarket achieves more than 95% accuracy in the closing hours of a market. The platform operates legally in many leading markets worldwide.

Polymarket’s top rival Kalshi achieved a monthly trading volume record in October 2025, surpassing $4.39 billion. Data from Dune Analytics shows both platforms saw notional trading volume rise above $2 billion for the first time during the week ending October 19.

Jan 2022, the Commodities and Futures Trading Commission labeled Polymarket’s prediction markets as “binary options.” Such instruments can only be offered by registered exchanges in the United States.

This classification resulted in a $1.4 million civil penalty for Polymarket. The platform subsequently restricted access to U.S. users to comply with regulatory requirements.

Polymarket Faces Wash Trading Allegations Earlier in 2024

Earlier concerns surfaced in October 2024 when Fortune reported on wash trading claims. Chaos Labs and Inca Digital research indicated that up to one-third of Polymarket’s presidential trading volume could be tied to wash trading.

Scoop: Blockchain researchers have found evidence of rampant wash trading on the leading electoral betting site Polymarket, with Chaos Labs concluding that one-third of volume on its presidential market is likely artificial pic.twitter.com/UyuylpUL6g

— Leo Schwartz (@leomschwartz) October 30, 2024

Analysts found that Polymarket activity exhibited signs of wash trading, a form of market manipulation where shares are bought and sold, often simultaneously and repeatedly, to create a false impression of volume and activity, the report states.

The platform faced scrutiny over its presidential betting polls, with Republican nominee Donald Trump leading Kamala Harris 64.9% to 35.3%. A user known as Fredi9999m placed more than $20 million in bets on Republican outcomes, raising skepticism about result accuracy.

Wash trading involves repeatedly buying and selling shares to create false impressions of higher trading volume. This tactic can mislead market participants about actual liquidity and trading interest in specific markets.