$1.2M Profit on Polymarket Before U.S. Strike on Iran Sparks Insider Trading Concerns

What Happened

According to blockchain analytics firm Bubblemaps, the wallets placed large “Yes” bets on a Polymarket contract asking whether the U.S. would strike Iran by February 28, 2026. Most of the wallets were funded within 24 hours of the attack and had no prior trading history.

One wallet purchased more than 560,000 shares at an average price of 10.8 cents. When the contract resolved at $1 per share, the position yielded roughly $560,000 in profit. Another account bought about 150,000 shares at 20 cents and secured a six-figure return.

All six wallets reportedly appeared in February 2026. The timing has fueled speculation that the traders may have had advance knowledge of the strike.

The military operation followed reports of explosions in Tehran amid joint U.S.-Israeli activity. The contract handled more than $89 million in total volume, with implied odds jumping sharply before confirmation.

Why This Matters

If the trades involved material nonpublic information, they could raise insider trading concerns. U.S. regulators have previously warned that event contracts tied to sensitive government actions may fall under existing enforcement frameworks.

For Polymarket, the incident places renewed focus on surveillance and compliance standards. While decentralized platforms emphasize openness, large coordinated positions can undermine trust if linked to privileged information.

For traders, the episode highlights structural risks in geopolitical markets. Sudden odds spikes before confirmation can signal information asymmetry. Retail participants often react late, absorbing losses.

The broader crypto market also reacted to the strike. Bitcoin declined sharply during the volatility window, while oil futures moved higher.

What’s the Buzz around Prediction Markets?

Prediction markets have expanded rapidly in 2026, with growing participation in politics, macroeconomics, and global conflict scenarios. Contracts tied to military action and political instability often attract outsized volume due to headline risk.

Regulators, including the Commodity Futures Trading Commission, have previously flagged insider trading risks in event-based markets. Competing platforms have faced scrutiny over compliance lapses.

The incident revives debate over whether decentralized markets can effectively police sensitive information flows. It also reinforces calls for stronger monitoring when contracts intersect with national security events.

As of publication, Polymarket has not issued a public statement addressing the wallet activity. Whether regulators investigate will likely depend on evidence of coordinated information access.