Researchers Find Potential Price Manipulation on Polymarket BTC Bets

A group of traders appears to have collected over eight million dollars by manipulating the price of bitcoin on Binance to influence Polymarket betting outcomes. Researchers from Stanford University and Singapore Management University analyzed five minute bitcoin prediction contracts and discovered a pattern of suspicious trading activity.

These contracts settle based on a price oracle that averages data from major exchanges. The study shows that traders would take a position and then place aggressive orders on Binance in the final seconds of the window. This surge in trading volume briefly nudged the price enough to force a winning outcome for their bets, before the price reverted to normal levels shortly after.

While only a small group of about 800 traders participated in this activity, the impact on retail users was significant. Data indicates that retail participants suffered the vast majority of losses during these specific cycles. The researchers noted that these moves carried no actual market information and were purely intended to flip the settlement results.

The authors suggest that lengthening the settlement window could stop this behavior. They observed that the manipulation is much less effective on longer duration contracts. Market participants should watch to see if prediction platforms adjust their settlement timeframes to protect users from similar tactics in the future.