The rapid growth of the polymarket prediction market may not be entirely organic but rather inflated by artificial trading activity, according to research published by Columbia University.
In an 80-page paper titled “Network-based Detection of Wash-Trading,” which has not yet undergone peer review, Columbia researchers identified widespread washing activity in the polymarket beginning in July 2024. In that month, they found that the trades accounted for nearly 60% of the platform’s total trading volume.
“This activity continued into late April 2025 before subsiding significantly, and increased again to nearly 20 percent of volume in early October 2025,” they wrote.
The researchers determined that 25% of the total trade volume of the polymarket in the last three years was attributed to artificial trading.
One of the paper’s co-authors, Columbia University professor Yash Kanoria, said, Bloomberg“I hope that Polymarket will accept the review of our paper.” The authors say the polymarket is largely responsible for the laundering of the trade, citing the structure of its operations as a contributing factor.
Cointelegraph reached out to Polymarket for comment but did not receive a response by the time of publication.
Wash the trade – A practice in which the same trader buys and sells the same asset to create a false impression of market activity – is illegal in the United States because it manipulates prices and misleads investors about the real demand and liquidity of the market.
Allegations of trade laundering are not a new phenomenon in the cryptocurrency industry. In 2023, a report by Solidus Labs said that decentralized exchanges are particularly Rife with a commercial wash. The report found that, based on an analysis of 30,000 Ethereum-based decentralized liquidity pools, nearly 70% engaged in trade laundering over a three-year period.
Related: Crypto firm pleads guilty to laundering Token produced by FBI
Allegations of money laundering cast a shadow over the rise of prediction markets
The latest money laundering allegations cast a shadow over the rapid rise of Polymarket and the broader blockchain-based prediction market sector.
These markets gained popularity during the 2024 United States presidential election cycle for accurately predicting the outcome. Polymarket’s rise in popularity has positioned it to pursue a reported $10 billion valuation Amidst rumors of a major funding round.
Polymarket has emerged as one of the leading decentralized prediction platforms, allowing users to bet on real-world events without relying on a central bookmaker.
Count Cointelegraph recently reportedPolymarket is preparing to re-enter the US market in November, just months after the Commodity Futures Trading Commission (CFTC) issued a no-action letter in a clearinghouse acquired the company.
Related: Kalshi, Polymarket Traders Bet Supreme Court Will Block Trump’s Tariff Powers
