Can you trade with insider trading on an investigation of your own insider trading? Polymarket has just turned that question from philosophical to practical.
Blockchain practitioner ZachXBT released findings Thursday morning naming Axiom, a crypto trading platform, as the firm whose employees he believed had used non-public information to place profitable trades.
The investigation had been teased for days, and Polymarket had set up a contract that allowed users to bet on which company would be named, pulling in about $40 million since Monday.
The problem is that someone clearly knew the answer before it dropped.
Lookonchain identified 12 wallets that bet heavily on Axiom prior to the disclosure, yielding a combined profit of over $1 million.
A separate analysis by Polysights, a data terminal that tracks suspicious activity on Polymarket’s public ledger, flagged five wallets that collectively bet about $50,000 and walked away with $266,000.
More on-chain data analyzed by CoinDesk tells the full story. The largest Yes holder on the Axiom market, an account called predictorxyz, accumulated 477,415 shares at an average price of $0.14 and now sits on $411,000 in profit.
That’s roughly a 7x return on a bet placed before the answer was public. The second largest holder, an anonymous wallet, bought 109,450 shares at $0.33. The concentration is remarkable. This was not a broad market full of educated guesses. A handful of wallets dominated the Axiom side of the book.
For most of the week, another platform called Meteora had been the market front-runner with over 50% odds, CoinDesk reported.
Odds swung to Axiom late Wednesday, which peaked at 46.2%. Anyone who bought Axiom stock in the window between that denial and ZachXBT’s Thursday morning announcement either read the room very well or already knew what was coming.
ZachXBT acknowledged on social media that he had reached out to Axiom for comment and conducted multiple interviews prior to publication, making a leak “probably inevitable.”
This means that several people in the company knew the report was coming before it went live. Any of them could have placed bets directly or tipped someone who did.
Polymarket’s offshore platform does not perform identity checks, which makes attribution difficult without the cooperation of the exchange itself.
Axiom said it was “shocked and disappointed” by the findings and would continue to investigate. It did not respond to questions about whether it was aware of any staff trading at the Polymarket stake.
The structural irony here is that the mechanism worked exactly as designed. It just happened to reward the people who were the subject of the investigation rather than those who carried it out.
