Crypto-based prediction market Polymarket has tapped blockchain analytics firm Chainalysis to monitor trading activity and enforce its market rules, as part of its efforts to address concerns about insider trading and market integrity.
Chainalysis offers a suite of tools, including investigative software and on-chain monitoring systems, to flag suspicious behavior, based on a model designed to identify patterns consistent with traders acting on non-public information, the companies announced Thursday.
The move comes amid growing scrutiny of prediction markets. Critics have argued that platforms like Polymarket could be vulnerable to insiders – such as political operatives or corporate employees – who place informed bets before the information is made public. In traditional finance, such activity is illegal and closely monitored. In crypto-based markets, enforcement of the rules has been less clear.
Polymarket’s response is to rely on the transparency of the blockchain. Since every transaction is recorded on-chain, activity can be traced and analyzed after the fact. By layering Chainalysis’ data tools, the company aims to detect suspicious transactions in real time and, if necessary, share evidence with regulators.
Simply put, Polymarket sets up a sort of digital police. The aim is to show that even in a decentralized environment, the rules can be enforced. The broader goal is to reposition Polymarket as a credible financial platform rather than a crypto betting site.
“Polymarket was built on-chain because transparency matters, and our platform shows what markets can look like when transactions are open, traceable and accountable by design,” said CEO Shayne Coplan.
Coplan argued that prediction markets serve a broader purpose than speculation. He described them as “a very useful global thermometer,” in which prices reflect the likelihood of actual outcomes, at an event in New York this week.
Yet this usefulness depends on trust. If users believe markets are biased by insiders, prices become less reliable. This risk has increased as Polymarket has grown, gaining mainstream attention during events such as elections and attracting interest from both retail traders and institutions.
Coplan placed emphasis on building something sustainable, focusing on products that “last” instead of following short-term trends.
