A new study from Columbia University suggests that a large portion of trading activity on Polymarket, a leading blockchain-based prediction platform, may be artificially generated. The 80-page paper, titled “Network-Based Detection of Wash-Trading,” alleges that as much as 60% of Polymarket’s volume during peak months came from wash trading—a form of market manipulation where traders buy and sell the same asset to inflate trading metrics and mislead observers about real demand.
The study, which has not yet undergone peer review, found that artificial trading began to spike around July 2024, accounting for nearly 60% of total activity. This manipulation reportedly persisted until April 2025 before tapering off, only to resurface again in October 2025 at around 20% of the platform’s volume. Over the past three years, the researchers estimated that roughly one-quarter of all trading on Polymarket stemmed from such practices.
Yash Kanoria, a Columbia University professor and one of the paper’s co-authors, told Bloomberg that he hoped Polymarket would welcome the research findings. The authors suggested that the exchange’s operational model may have inadvertently facilitated the manipulation, though they did not provide direct evidence of intent. At the time of publication, Polymarket had not commented on the study.
Wash trading is illegal in the United States because it creates an illusion of liquidity and price movement that can deceive investors and distort markets. Similar concerns have long plagued the crypto sector. A 2023 report by Solidus Labs, for instance, revealed that up to 70% of Ethereum-based decentralized exchange liquidity pools exhibited wash trading behavior over a three-year period, underscoring the persistence of the problem across decentralized finance platforms.
These findings cast a shadow on Polymarket’s meteoric rise and the broader prediction market ecosystem, which has gained popularity for forecasting real-world outcomes such as political elections and economic events. During the 2024 U.S. presidential race, Polymarket earned praise for its accurate predictions and was reportedly eyeing a $10 billion valuation amid speculation of an upcoming funding round.
The controversy arrives at a pivotal time for Polymarket, which has been preparing to re-enter the U.S. market after receiving regulatory clearance from the Commodity Futures Trading Commission (CFTC) earlier this year through a no-action letter to a clearinghouse it acquired. However, renewed scrutiny over its trading integrity could complicate those plans and reignite debate over the transparency and reliability of decentralized prediction markets.
