Deng Tong, Golden Finance

On February 28, 2026, war broke out again in the Middle East. The Israeli Defense Minister confirmed: Israel and the United States jointly launched preventive strikes against Iran. Subsequently, an explosion occurred in the east of Tehran, the Iranian capital, and multiple missiles hit multiple targets in the center of Tehran. There was an attack near the office of Iran's Supreme Leader, and Khamenei was moved to a safe house. On March 1, Trump issued a statement confirming that Iran’s Supreme Leader Ayatollah Ali Khamenei was dead.

When the situation in the Middle East suddenly fell into the abyss of war, a gambling game had already settled in the prediction market.

1. Polymarket reproduces insider trading

According to analytics firm Bubblemaps SA, six accounts on the prediction platform Polymarket made about $1.2 million in profits by betting that the United States would strike Iran before February 28. The accounts, all newly opened in February, placed bets solely on the timing of a potential strike on the United States. Some of the bets in these accounts were made just hours before the first explosions in Tehran were reported, and some were even purchased for about a dime each.

“Latest News: Six suspected insiders made $1.2 million from betting on U.S. air strikes on Iran, most of these accounts:

• Recharged within the past 24 hours;

• Special bets on the February 28th air raid;

• Buy “Yes” hours before the air raid

Suspicions of insider trading have drawn the attention of on-chain investigators, who say the pattern is similar to previous behavior linked to alleged insider activity in prediction markets.

X user @antpalkin posted: “Pete Hegseth Someone in Hegseth's inner circle made an insider transaction of $500,000 on the Polymarket website. The "anonymous" trader knew in advance that the United States would launch an air strike on Iran. Evidence: http://polymarket.com/@0x1caA6a7ad0c6916a. eF7b67946De2e57Ad24846a0-1772054568088From 11 cents to 100 cents, who made 800% profit by using confidential insider information? This is not an isolated case - a large number of suspicious single-day accounts use the information leaked by the US military to easily make millions of dollars."

2. Discussions triggered by “making war fortune” and responses from the two forecasting giants

Connecticut Senator Chris Murphy stated: "This is simply ridiculous and actually legal. People around Trump are profiting from war and death. I will introduce legislation as soon as possible to prohibit this behavior."

Murphy also shared another X post from Democratic Rep. Mike Levin, which showed that a Polymarket account named "Magamyman" made $515,000 in one day by betting that the United States would strike Iran.

"A Polymarket account named "Magamyman" appears to have made $515,000 in one day by betting on last night's U.S. air strikes on Iran, with the first trade completed 71 minutes before the news became public.

When this person bought, the market predicted that the probability of this air raid happening was 17%. They turned roughly $87,000 into more than $500,000 overnight.

It’s important to note that Donald Trump Jr. is on Polymarket’s advisory board and his company invested tens of millions of dollars in the platform last year. The U.S. Department of Justice and the Commodity Futures Trading Commission both opened investigations into Polymarket, but those investigations were dropped after Trump became president.

Prediction markets should not be used as a tool to profit from military actions that are known in advance.

We need answers, transparency and oversight. ”

Arizona Senator Ruben Gallego commented: "Insider trading in broad daylight. It is undoubtedly illegal. Bastards like him are profiting off the sacrifice of our service members. Disgusting and unethical."

Kalshi and Polymarket are embroiled in controversy.

Kalshi is regulated by the Commodity Futures Trading Commission and states that it does not allow betting on wars or assassinations. Faced with numerous doubts from the outside world, Kalshi co-founder and CEO Tarek Mansour responded:

About Khamenei:

We do not list markets that are directly tied to death. When the potential outcome in certain markets involves death, we have rules in place to prevent someone from profiting from death. That's what we do here.

I know some of you disagree and would prefer that we list these markets without a death exemption because it simplifies the rules and many traditional markets, such as oil futures, serve as alternative markets for war and death. But we think this is different from the market directly basing settlement on someone's death, which is not allowed by U.S.-regulated entities.

So, what is the significance of this market?

It is important to create a market about Ali Khamenei stepping down as supreme leader because a change in leadership in Iran would have a significant impact on the world order:

• Geopolitical Impact

• Economic Consequences

• National Security Considerations

• Oil and commodity prices, many of which will fluctuate based on news and expectations regarding this outcome

Even in authoritarian regimes, it is always possible for a ruler to step down or hand over power without dying. This has just happened in Venezuela.

In these cases, we will clearly state the considerations in the rules and market pages, but today's situation made us realize that we still have a lot of work to do to improve the user experience and increase the way the rules are displayed. We are committed to improvement. At the same time, we will take the following measures:

• We will refund all fees for this market.

• If you held a position before Khamenei's death, we will settle based on the last traded price before his death. (This is clearly stated in our rules.)

• If you hold a position after Khamenei's death, we will refund your entry cost in full.

However, some believe that the market on whether Khamenei will soon "step down" is actually making such a bet.

Amanda Fisher, former chief of staff of the U.S. Securities and Exchange Commission, believes: "So this more or less provides a market for assassination agents."

Polymarket stands by its controversial decision to allow users to bet on military strikes.

In "A Note on Middle East Markets," Polymarket states: "The strength of prediction markets is the pooling of collective wisdom to provide accurate, unbiased predictions of major events in society. This ability is especially valuable during harrowing moments like today. After speaking with those directly affected by the attacks, we realized that prediction markets can provide them with the answers they need in a way that television news and media cannot."

Polymarket seems to be conveying the idea that "everything can be financialized" and "everything can be bet", and uses "accurate prediction of major social events" as a guise. The controversy itself may not be about who made money by taking advantage of the information gap, but that "war gambling" is testing the bottom line of the prediction market.

3. Can insider trading be prohibited?

The existence of insider trading is rooted in information asymmetry and considerable arbitrage space.

Coinbase CEO Brian Armstrong once posted on the

But now, the nature of the prediction market has long since changed, and it has become a money-making tool for a small number of people to seek high personal profits through insider trading.

The prediction market is a mechanism based on binary contracts or event probability trading. For example, users can bet on real-life events such as "whether a country will launch military action on a specified date." In theory, these markets produce probabilistic predictions through the aggregation of collective information, but if there are users who possess non-public information (such as military action plans), it may lead to unfair advantages and thus constitute insider trading.

Bubblemaps CEO Nicholas Vaiman said: "In situations involving war or conflict, information is disseminated more widely before it becomes public. In addition, Polymarket often only requires a wallet to conduct transactions, which provides a high degree of anonymity, so informed participants will have more incentive to place their bets early."

Unlike traditional financial markets, event contracts in prediction markets are usually regarded as derivatives rather than securities, which makes it difficult for the SEC to directly intervene in supervision. Some platforms such as Polymarket have servers located overseas and do not accept US users, further circumventing CFTC supervision and providing opportunities for insider trading in anonymous accounts.

There is currently no mature regulatory framework specifically targeting insider trading in prediction markets, and relevant legislation is still in the proposal stage.

U.S. Rep. Rich Torres already plans to introduce the Financial Prediction Markets Public Integrity Act in 2026. The bill would prohibit federal elected officials, political appointees, and executive branch employees from trading in prediction market contracts tied to government policy or political outcomes if they have nonpublic information as a result of their official duties. The bill would be similar to existing insider trading standards in traditional financial markets but would extend those standards into the realm of prediction markets.

4. What other insider trading scandals have occurred in the prediction market?

January 3, Joe Pompliano posted on

On February 26, on-chain detective ZachXBT launched an insider trading investigation into a platform in the prediction market, focusing on the betting behavior of "Axiom-related events" and accusing Axiom employee Broox Bauer and others of having been engaged in insider trading activities since the beginning of 2025. Meanwhile, a small group of cryptocurrency wallets won over $1.2 million by staking Polymarket contracts related to Axiom’s on-chain investigation.

On February 27, reports pointed out that OpenAI recently fired an employee because of his trading based on internal information on prediction market platforms such as Polymarket and Kalshi. OpenAI Applications CEO Fidji Simo disclosed the firings in an internal email to employees earlier this year. She said the employee "used OpenAI's confidential information for external prediction markets such as Polymarket."

Analysis by financial data platform Unusual Whales shows that since March 2023, there have been a series of activity clusters around the OpenAI theme that have been flagged as suspicious by the platform: Unusual Whales flagged 77 suspected insider trading positions in 60 wallet addresses. They looked at factors such as the account's registration time, transaction history and investment amount. The suspicious transactions mainly revolve around the release dates of products such as Sora, GPT-5 and ChatGPT browsers, as well as the departure or retention of CEO Sam Altman. In November 2023, two days after Altman was dramatically ousted from the company, a new wallet made a profit of more than $16,000 betting on his return. No bets have been placed on this account since.