Polymarket probes Israel election bets, exposing the limits of on-chain forensics

Polymarket is investigating bets placed just before polls closed in Israel’s October 27 election. The case highlights a problem with blockchain transparency: trades are public, but knowing who placed them—and whether they had inside information—is harder.

Hundreds of new accounts were set up to place bets on Benjamin Netanyahu staying as Prime Minister and on the Likud Party being the biggest party in the Knesset, reports Reuters. The suspicious aspect of the bets is their timing. The bets were made before the polling stations closed, and some of the accounts withdrew over $100,000 when the exit poll results were made public. Polymarket is now examining many of the wallets to find out whether the bets were the result of insider trading or not. However, suspicious trading patterns are not proof of insider trading, and no wrongdoing has been established.

Newly funded wallets are a signal, not a verdict

Bubblemaps discovered 101 accounts that received funding on the same day of the election and before voting closed. Polysights has also flagged the matter. The timing raises suspicions, but profitable bets can be due to effective research or just good luck. To this moment, there is no public evidence linking any of the wallets to election officials or insiders.

What the chain reveals and what it hides

It is possible for anybody to analyze the offshore transactions made on Polymarket via Polygon. But while the blockchain can reveal information on transactions, it fails to provide any insights regarding the identity of the holder of a specific wallet or the existence of ownership across multiple wallets. Hence, in order to confirm that there is ownership of multiple wallets, there is a need for data from the relevant exchange, banking channels, and devices used.

Research from the University of British Columbia shows that the presence of unusual market-maker losses and connected wallets can be considered as warning signs that should be looked into. However, none of those trends are proof of a criminal act. Lawyers at Katten, meanwhile, refer to the broader issue of so-called “outcome agency”: did a trader simply predict an event, or did they know about or influence its outcome?

How Polymarket polices its own markets

Polymarket wants to solve the issue of anonymity by means of a surveillance system that connects information from blockchain activities and social media, data resulting from filings about elections, and data collected from banks and cryptocurrency companies. NPR states that this system creates several hundreds of notifications every day. The project is supervised by Shana Bautista, who was a former FBI official and currently serves as the head of the 16-person investigations team.

Her team has already examined a multitude of wagers related to the November 3 midterm elections. According to NPR, at least two cases have been referred to the CFTC. The regulated platform of Polymarket in the US requires users to verify their identities, while its international platform allows crypto trades to be performed anonymously. However, according to Bautista, it is often possible for investigators to unmask the owner of the wallet.

The money riding on election markets

The need for tighter surveillance is growing alongside the money flowing into election markets. According to the Council on Foreign Relations, Americans have already wagered more than $1.4 billion on the U.S. midterms, with that figure potentially exceeding $2 billion by November 3.

An October 29 Artemis snapshot put Polymarket’s one-year trading volume at $84.9 billion. However, that represents cumulative trading activity, not fresh deposits.

The influence also extends beyond those placing bets. A Brennan Center-supported study found that favorable betting odds increased voters’ perceptions of a candidate’s chances of winning by 10–20 percentage points. Yet more than 80% of respondents wanted stricter regulation or an outright ban.

A pattern regulators are already chasing

Research suggests the risks go beyond the Israel election. The Anti-Corruption Data Collective identified more than $20 million in bets on 2026 midterm outcomes that insiders could have known beforehand.

High-stakes longshot bets won 24.2% of the time in those markets, compared with 14.9% in markets decided by voters. Researchers also identified 310 instances of unusual price movements shortly before public announcements across three platforms. While concerning, these findings do not prove insider trading.

Regulators are already responding. The CFTC issued a surveillance advisory in February following cases involving misuse of nonpublic information. Meanwhile, Cryptopolitan reported that Polymarket tightened its trading rules in March.

The Israel investigation now presents a practical test: can Polymarket turn suspicious blockchain activity into credible evidence of wrongdoing?