The rapid growth of prediction market polymarkets was not entirely organic and may have been inflated by artificial trading activity, according to a study published by Columbia University.
In an 80-page paper titled “Network-based Wash Trading Detection” that has not yet been peer-reviewed, Colombian researchers identified large-scale wash trading activity starting on Polymarket starting in July 2024. In the same month, they found that wash trades accounted for nearly 60% of the platform’s total trading volume.
“This activity continued until late April 2025, after which it subsided significantly and increased again to approximately 20 percent of trading volume in early October 2025,” they wrote.
Researchers determined that 25% of Polymarket’s total trading volume over the past three years was due to artificial trading.
“We hope Polymarket will welcome the analysis of our paper,” Yash Kanoria, a professor at Columbia University and one of the paper’s co-authors, told Bloomberg. The authors argue that polymarkets are largely responsible for wash trading and that their business structure is a contributing factor.
Cointelegraph reached out to Polymarket for comment, but did not receive a response at the time of publication.
Wash trading (the practice of buying and selling the same asset by the same traders to create a false impression of market activity) is illegal in the United States because it manipulates prices and misleads investors about the true demand and liquidity in the market.
Alleged wash trading is not a new phenomenon in the crypto industry. In 2023, a Solidus Labs report claimed that wash trading is particularly prevalent on decentralized exchanges. The report, based on an analysis of the liquidity pools of 30,000 Ethereum-based decentralized exchanges, found that nearly 70% engaged in wash trading over a three-year period.
Related: Cryptocurrency firm pleads guilty to washing FBI tokens
Allegations of wash trading cast a shadow on the rise of prediction markets
The latest wash-trading allegations cast a shadow on the rapid growth of Polymarket and the broader blockchain-based prediction markets sector.
These markets gained attention during the 2024 US presidential election due to their ability to accurately predict the outcome. Polymarket’s surge in popularity has led it to pursue a reported $10 billion valuation amid rumors of a large funding round.
Polymarket has emerged as one of the leading decentralized prediction platforms, allowing users to bet on real-world events without relying on a central bookmaker.
As Cointelegraph recently reported, Polymarket is preparing to re-enter the US market in November, just months after the Commodity Futures Trading Commission (CFTC) issued a no-action letter to the clearinghouse it acquired.
Related: Carsi, Polymarket traders expect Supreme Court to curb Trump’s tariff powers