Can you perform insider trading as part of an investigation into your own insider trading? Polymarket has just transformed this philosophical question into a practical question.
Blockchain detective ZachXBT released his findings Thursday morning naming Axiom, a cryptocurrency trading platform, as the company whose employees he said used non-public information to make profitable trades.
The investigation had been discussed for days and Polymarket had created a contract allowing users to bet on which company would be named, bringing in around $40 million in volume since Monday.
The problem is that someone clearly knew the answer before it happened.
Lookonchain identified 12 wallets that were betting heavily on Axiom ahead of the reveal, making a combined profit of over $1 million.
A separate analysis by Polysights, a data endpoint that tracks suspicious activity in Polymarket’s public ledger, identified five wallets that collectively bet about $50,000 and walked away with $266,000.
Other on-chain data analyzed by CoinDesk tells the whole story. The largest holder of Yes on the Axiom Market, an account called predictorxyz, has accumulated 477,415 shares at an average price of $0.14 and now has a profit of $411,000.
This is about 7 times the return on a bet placed before the answer was public. The second holder, an anonymous wallet, purchased 109,450 shares at $0.33. The concentration is notable. This was not a broad market filled with educated guesses. A handful of portfolios dominated the Axiom side of the book.
For most of the week, another platform called Meteora was the market favorite with a rating of over 50%, as CoinDesk reported.
The odds shifted to Axiom on Wednesday night, which peaked at 46.2%. Anyone buying Axiom stock between that rejection and ZachXBT’s release Thursday morning either read the room extremely well or already knew what was coming.
ZachXBT acknowledged on social media that he contacted Axiom for comment and conducted several interviews before posting, making a leak “likely inevitable.”
This means that several people within the company knew the report would be published before it went live. Any of them could have placed bets directly or tipped someone who did.
Polymarket’s offshore platform does not carry out identity checks, making attribution difficult without the cooperation of the exchange itself.
Axiom said it was “shocked and disappointed” by the results and would continue its investigation. The company did not respond to questions about whether it was aware of employees trading on the Polymarket bet.
The structural irony here is that the mechanism worked exactly as intended. It turned out that this rewarded the people who were the subject of the investigation rather than those who carried it out.
