Polymarket Bettors Turn $50,000 Into $1 Million on ZachXBT Investigation, Raising Insider Trading Questions

A cluster of at least 12 newly created wallets collectively generated over $1 million in profit on Polymarket by betting that blockchain investigator ZachXBT would name crypto trading platform Axiom as the subject of an insider trading investigation, with trades placed hours before the findings were publicly released.

The incident highlights structural vulnerabilities in anonymous prediction markets, as Axiom employees had advance knowledge of the forthcoming report, and the platform’s lack of identity verification makes attribution of potential insider trading difficult to trace.

Suspicious Trading Patterns Before Public Disclosure

Polymarket had created a contract allowing users to bet on which company ZachXBT would accuse of insider trading, attracting approximately $40 million in volume since Monday. For most of the week, another platform called Meteora had been the market’s frontrunner with over 50% odds.

However, on late Wednesday, the odds swung dramatically toward Axiom, peaking at 46.2%. Blockchain analytics identified a small number of wallets that bet heavily on Axiom just before the reveal.

The account “predictorxyz” was flagged as the largest Yes holder on the Axiom market, accumulating 477,415 shares at an average price of $0.14—representing a $66,800 investment that has now grown to approximately $411,000 in profit, a roughly 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.

A separate analysis identified five wallets that collectively wagered around $50,000 and walked away with $266,000. Overall, at least 12 wallets netted a combined profit exceeding $1 million.

Investigation Background and Axiom’s Advance Knowledge

ZachXBT published findings on Thursday morning naming Axiom, a crypto trading platform, as the company whose employees he believed had used non-public information to place profitable trades. According to his investigation, Axiom employee Broox Bauer and others allegedly engaged in insider trading activities since early 2025, using internal tools to query sensitive user information and track private wallet activity.

ZachXBT acknowledged that he had contacted Axiom for comment and conducted several interviews before publishing, making a leak “probably inevitable.” This means multiple people at the company knew the report was coming before it went live, and any of them could have placed bets directly or tipped someone who did.

Following the publication, Axiom issued a statement saying it was “shocked and disappointed” by the findings, had removed access to the tools in question, and would continue to investigate. The company did not respond to questions about whether it was aware of any employees trading on the Polymarket wager.

Subsequent tracing of the funding source for the “predictorxyz” account found it was funded by 70,000 USDC from a Solana address. Through timeline analysis, the address was determined to belong to an active Axiom user with the username “JustADegen” on the FOMO platform, prompting calls for the community to assist in identifying the individual.

Structural Irony and Regulatory Context

The incident presents a striking irony: a market designed to predict the outcome of an insider trading investigation may itself have been traded on by insiders with advance knowledge of the subject. The mechanism worked exactly as designed—it just happened to reward the people who were the subject of the investigation rather than the ones conducting it.

Polymarket’s offshore platform does not conduct identity checks, making attribution difficult without cooperation from the exchange itself. This stands in contrast to regulated platforms like Kalshi, which maintain Know Your Customer (KYC) protocols and explicitly prohibit insider trading.

The incident follows a series of high-profile suspicious trades on Polymarket. In January 2026, a trader turned approximately $34,000 into nearly $410,000 by betting on Nicolás Maduro’s downfall just hours before a secret U.S. military raid was executed, sparking investigations into whether the user had access to classified intelligence. Another account reportedly made about $1.2 million on bets about Google’s most-searched people in 2025 and correctly predicted the release date of Google’s Gemini 3 AI model, prompting observers to label the user a “Google insider.”

Regulatory Response to Prediction Market Insider Trading

The Commodity Futures Trading Commission (CFTC) has asserted exclusive federal jurisdiction over prediction markets, with Chairman Mike Selig warning that any state-level challenges will be contested in court. However, the legal framework for insider trading in prediction markets remains a grey area.

In response to the Maduro incident, Representative Ritchie Torres (D-NY) introduced the “Public Integrity in Financial Prediction Markets Act of 2026” in January, which would prohibit federal employees from using prediction markets and criminalize trading based on material non-public information obtained through official duties. The bill has gained over 40 co-sponsors and is scheduled for House Financial Services Committee hearing in late February.

Kalshi CEO Tarek Mansour has publicly supported the push for regulation, stating that insider trading has always been banned on his regulated exchange but arguing that more must be done to rein in unregulated markets.

FAQ: Understanding the Polymarket Insider Trading Incident

Q: How much money did traders make on the Axiom bet?

A: At least 12 wallets collectively generated over $1 million in profit. The largest single account, “predictorxyz,” turned a $66,800 investment into approximately $411,000, a roughly 7x return. A separate analysis identified five wallets that wagered around $50,000 and walked away with $266,000.

Q: Why is this considered potential insider trading?

A: ZachXBT acknowledged he had contacted Axiom for comment and conducted several interviews before publishing, meaning multiple people at the company knew the report was coming. The trades were placed by newly created wallets shortly before the reveal, and the odds on Axiom spiked dramatically just before publication, suggesting advance knowledge rather than informed speculation.

Q: What is Polymarket doing to prevent this?

A: Polymarket operates as an offshore platform without identity verification requirements, making it difficult to trace or prevent such activity without cooperation from the exchange itself. This contrasts with regulated platforms like Kalshi that maintain KYC protocols and explicitly prohibit insider trading.

Q: What are the regulatory implications?

A: The CFTC asserts jurisdiction over prediction markets, but insider trading laws in this context remain untested. The “Public Integrity in Financial Prediction Markets Act” would explicitly criminalize using non-public information on such sites and prohibit federal employees from participating. The bill is currently under consideration in the House.