New research claims Polymarket is full of ‘washing deals’

New research suggests that Polymarket, the crypto-based platform that allows users to bet large sums of money on political races, is awash in a particular type of market manipulation: washed trading.

commercial laundry, according to Investopediais the practice of traders buying and selling the same stock almost simultaneously. In essence, wash trading simulates that a trade has taken place when, in fact, it has not. This can artificially inflate the prominence or trading volume of a particular stock, making it appear more popular than it actually is. In traditional finance, the wash transaction is illegal; however, in the world of “decentralized” (read: deregulated) finance, in theory, anything goes!

wealth rEPORTS that Chaos Labs researchers found that wash trading “made up about a third of trading volume on Polymarket’s presidential market,” while Inca Digital found that a “significant portion of (trading) volume” on the market “could be attributed to potential wash trading”. .”

Essentially, the researchers accuse the platform of allowing artificially inflated trading volume in the presidential market. The statements are interesting, even if vague. So far, neither Chaos Labs nor Inca Digital have made their research findings public in the form of a written report, sharing the research exclusively with Fortune. As such, it’s somewhat difficult to tell if they’re really on to something or not.

That said, they’re not the first to question whether the platform encourages misconduct. Polymarket was recently forced to conduct an investigation into some of its biggest punters after Bloomberg asked if a small number of accounts, all unabashedly pro-Trump, were controlled by the same person or group. Polymarket later revealed that four of its largest betting accounts were all managed by a French national.

Gizmodo reached out to Polymarket for comment on the latest research, as well as the two research firms to request the full reports.

Betting on the US presidential election is Polymarket’s most popular offering and for months the consensus on the site has been that Trump will retake the White House. Currently the Polymarket page for the White House race shows that 65% of users think Trump will win the presidency. Polymarket was heavily cited in coverage of the US presidential election, which is ironic since the site does nothing to gauge US sentiment. Or at least it shouldn’t. Americans have been banned from betting on the platform since 2022 due to a settlement with the Commodity Futures Trading Commission.

However, Polymarket’s defense against American participation is pretty weak. Bloomberg noticed that the platform’s “US user block” can be bypassed by using virtual private networks, and social media is full of instructions on how to do it.