A new study from Columbia University has highlighted concerns about the integrity of prediction market platform Polymarket, revealing that 25% of its trading volume is potentially inflated due to wash trading. This figure peaked at a staggering 60% in December 2024, casting doubt on the reliability of predictions and raising questions about Polymarket’s strategy for entering the U.S. market.
The study suggests that repetitive trade loops among linked wallets are responsible for this artificial inflation, impacting investor trust. While Polymarket hasn’t yet addressed these findings publicly, its founder, Shayne Coplan, previously focused on new product releases and token updates. Columbia University professor Rajiv Sethi commented on the report’s findings, stating: ‘Our findings suggest that wash trading is not only prevalent but significantly distorts reported trading volumes.’
The study’s implications are far-reaching, affecting Polymarket’s own POLY and ETH tokens as well as the broader cryptocurrency market.
The potential regulatory fallout remains a significant issue. If scrutiny intensifies, existing claims of over $3 billion in platform usage could be reassessed for accuracy. Market analysts anticipate possible regulatory responses that may impact trading volumes and investor confidence, especially since similar wash trading practices have been observed across unregulated crypto exchanges. The increasing scrutiny underscores the need for transparency and tighter regulation within prediction markets like Polymarket.
**Disclaimer:** This website provides information only and is not financial advice. Cryptocurrency investments are risky. We do not guarantee accuracy and are not liable for losses. Conduct your own research before investing.