Breaking! On the eve of U.S. military airstrikes, 12 mysterious wallets execute precise ambushes, Congress is furious, and the crypto prediction market becomes a new haven for "front-running"?

The day before U.S. military aircraft flew toward Iran, a crypto prediction market called Polymarket saw precise hourly bets placed. Twelve accounts that had never been active before concentrated their positions in the days leading up to the airstrike, investing about $67,000 and ultimately making a profit of $330,000.

Nearly half of the bets were placed within the last six hours before the attack. This level of timing accuracy immediately led market observers to think of one word: insider trading. This directly prompted a response from the U.S. Congress, with a Democratic senator publicly condemning such bets as “absurd” and announcing plans to push legislation to ban them.

The U.S. Commodity Futures Trading Commission (CFTC) quickly issued a statement emphasizing its full authority to enforce against illegal trading behaviors in prediction markets, including misuse of confidential information, fraud, and market manipulation.

Identifying these accounts isn’t complicated. First, filter out bets with unusually high amounts on relevant political issues, then find wallets that only bet on a single event, never closed early, and maintained a perfect record of wins. Among the thirteen wallets identified, twelve were created just days before the airstrike.

A senior executive at a financial data company commented that a new wallet placing heavy bets on a single event is suspicious. While misjudgments are possible, it’s hard not to suspect that the operator might have access to information unknown to the public.

This pattern isn’t the first of its kind. In January this year, before the U.S. seized Venezuelan President Maduro, six accounts were created just before the event, betting solely on Venezuela-related issues, then going silent. They used less than $10,000 in principal to earn over $130,000. Another earlier account, with $32,000, earned $400,000. Before the operation, the implied probability of Maduro leaving was consistently around 9%.

Earlier, during Israeli military actions, eight accounts made large opposite bets, earning over $400,000 in total. Of course, not all abnormal bets come from insiders. Earlier this month, a trader discovered a wallet heavily betting on a U.S. strike on Iran before a specific date at very low odds, ultimately losing nearly $100,000.

The controversy centers on the dual nature of platforms like Polymarket. They generally don’t require real-name registration, settle in cryptocurrencies, and offer a high degree of anonymity. However, all transactions are recorded on a public blockchain, with flows traceable to specific wallet addresses, making it possible to track “smart money.”

Analysts pointed out that about twenty hours before the strike, an old market question about whether the U.S. would strike Iran earlier saw its implied probability spike sharply near the deadline, contrary to expectations that it would decline.

Legally, prediction markets in the U.S. are classified as financial derivatives and regulated by the CFTC. Traditionally, futures markets allow “informed trading” to hedge risks. However, legal experts note that trading based on improperly obtained non-public information is clearly illegal. Government employees using official information to bet are directly violating laws against trading on material non-public information.

When it comes to military actions, the stakes are even higher. Leaks of military intelligence directly impact the surprise and success of operations, with dangers far beyond typical political information. As prediction markets grow larger, drawing clear boundaries between openness and national security has become a challenge regulators must face.

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