Predictions Platform Polymarket Volume Inflated by ‘Wash Trading’: Columbia Research

Polymarket, a leading crypto prediction market platform, has seen significant inflation of its trading volume due to “artificial” wash trading, a new Columbia University study ￰1￱ study notes that Polymarket was not itself responsible for wash trading, while the crypto-based structure could have enabled ￰2￱ 2024, concerns over wash trading and potential market manipulation plagued the decentralized prediction ￰3￱ the time, researchers noted that a “significant portion” of the virtual market’s activity might stem from wash ￰4￱ trading is a tactic where shares are repeatedly bought and sold to give the impression of higher trading ￰5￱ volume of activity on Polymarket has been significantly inflated by so-called wash trading in which users rapidly buy and sell the same contracts, according to a new study by Columbia University researchers ￰0￱ — Bloomberg (@business) November 7, 2025 Key Findings: Artificial Trading Skews Polymarket’s True Activity The study says that the phenomenon referred to as “artificial trading” has accounted for nearly 25% of all buy and sell transactions on Polymarket over the last three years.

A Polymarket representative told Bloomberg on Friday that the predictions market is reviewing the study and has no immediate ￰6￱ the researchers’ algorithm split up, the prevalence of wash trade was found to be 45% of all-time volume in sports markets, 17% in election markets, 12% in politics markets, and 3% in crypto markets. “I’m hopeful that Polymarket will welcome the analysis in our paper,” Yash Kanoria, a professor at Columbia University’s business school and co-author, told Bloomberg . “Wash trading doesn’t add liquidity or information to the market, so it would seem valuable to distinguish authentic from inauthentic volume.” The prediction market hit record highs in October for volume, active traders, and new market launches, led by the native token ￰7￱ trading volume reached an unprecedented $2.59 billion high in ￰8￱ platform recently announced securing $205 million across two previously undisclosed funding rounds, between 2024 and 2025, valuing the firm at $1.2 ￰9￱ Accuracy and Indicators of Credibility According to independent tracking, Polymarket is more than 95% accurate in the closing hours of a ￰10￱ a detailed analysis , Cryptonews author Eric Huffman notes that Polymarket is legit and legal in many leading markets ￰11￱ platform’s top rival Kalshi, achieved a monthly trading volume record, breaking above $4.39B in ￰12￱ to data collected by Dune Analytics , Kalshi and Polymarket saw notional trading volume rise above $2 billion for the first time during the week ending ￰13￱ the U.

S., the Commodities and Futures Trading Commission (CFTC) labeled Polymarket’s prediction markets as “binary options,” which can only be offered by a registered ￰14￱ resulted in a $1.4 million civil penalty for Polymarket and forced the platform to restrict access to U. S. users.