Polymarket, the largest decentralized prediction market, is under fire after a bet about a U.S.-Ukraine rare earth mineral deal.
Polymarket, the largest decentralized prediction market, is under fire after a bet about a U.S.-Ukraine rare earth mineral deal with President Donald Trump was resolved as “yes” despite no such deal occurring. The betting market, which had over $7 million in trading volume, saw a sudden spike in probability from 9% to 100% between March 24 and 25, sparking allegations of manipulation. Users accused a whale—a large holder of UMA tokens—of casting 5 million tokens across three accounts, controlling 25% of the total vote and influencing the outcome in their favor.
A crypto threat researcher alleged this was a governance attack, where the whale exploited Polymarket’s reliance on UMA Protocol’s oracles to manipulate the resolution process. Despite the backlash, Polymarket stated it would not issue refunds, arguing that while the result was unexpected, it did not constitute a market failure. A moderator acknowledged that the outcome went against user expectations and the platform’s own clarification but insisted the resolution would stand.
Not everyone agreed that this was a deliberate attack. A Polymarket user argued that the UMA whales who voted were the same ones who regularly participate in disputes, do not trade on Polymarket, and ignored clarifications to claim rewards without facing penalties. However, users on X and Reddit criticized the system, with one warning against betting on Polymarket, claiming that influential users could manipulate results for profit. Another pointed out that Polymarket’s supposed decentralization was undermined if a single whale could sway outcomes.
Polymarket responded on its Discord server, calling the incident “unprecedented” and stating it was working with UMA to prevent similar issues. The platform sought community feedback on possible measures but did not outline any concrete steps. Some users recalled a previous case where Polymarket overturned a UMA resolution regarding Barron Trump’s alleged involvement in a Solana-based meme coin, raising concerns about large token holders exerting influence over market outcomes.
This controversy comes as prediction markets experience rapid growth, with betting volume increasing 565% in Q3 2024, largely driven by wagers on the U.S. presidential election. Polymarket dominates the sector with a 99% market share.
The U.S. Commodity Futures Trading Commission has previously warned that unregulated prediction markets like Polymarket are vulnerable to manipulation. Despite this, the platform maintains that it will implement new monitoring systems to prevent future governance attacks. However, it has not provided details on how it plans to safeguard the integrity of its betting markets.
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