The authors of the study examined roughly two months of five-minute bitcoin contracts. They found unusually large orders on Binance in the final seconds before settlement, followed by rapid price reversals in bitcoin.
The paper did not prove traders’ intent or directly establish that the spot-market orders were placed by the same people holding positions on Polymarket. But it found that, excluding market makers, 93% of the losses in windows classified as manipulated fell on retail traders.
“A bet the market treated as near-certain was overturned one time in three,” the authors wrote.
Polymarket did not respond to a CoinDesk email requesting more information.
Prediction market concerns
Before the July-dated study, Variance Lover, a pseudonymous onchain analyst, raised similar concerns, including in one extensive and detailed post dated May 21.
“By now, most people are aware that market manipulation has become a major problem on Polymarket’s 5-minute crypto markets. The mechanism is simple: accumulate a large position on Polymarket, then move the price on Binance during the settlement window to force the market to resolve in your favor.”
An Axis Robotics contributor who goes by 郡主Christine on X, on May 11 noted that manipulation in Polymarket’s five-minute bitcoin market was becoming more severe, citing “precise reversals in the last few seconds.”
