Original Title: "A Failed Market Manipulation Became a Template for Misusing Polymarket"
Original Author: Eric, Foresight News
On the evening of February 23, Beijing time, ZachXBT announced a major piece of news on X: an investigation into one of the most profitable companies in the cryptocurrency field will be revealed on February 26. This investigation will expose the long-term abuse of internal data for insider trading by the company's employees.
As of the time of writing, this tweet has garnered over 8.5 million views. In the bear market for cryptocurrencies, the title of "most profitable company" pricks the sensitive nerves of investors, and this tweet has triggered a massive "no prize guessing game" on X.
As a leading prediction market, Polymarket is clearly not going to miss out on this wealth and traffic. Currently, the market for "Which company will ZachXBT expose" is only surpassed in popularity by the prediction market for the timing of a U.S. attack on Iran. Although the trading volume is even less than predicting Bitcoin's price fluctuations over five minutes, the topic has reached maximum engagement.
At the beginning of this market, everyone initially thought the chosen "lucky one" would be World Liberty Financial, especially since Eric Trump, the project's co-founder and the current U.S. president's son, deleted a related tweet that was hard to ignore.
However, over time, Meteora rose to the highest probability position. One operation involving a newly created address hinted at a conspiracy.
On February 24 at around 7 AM Beijing time, a newly created address (0x9b65a8d272ef7daeba9ebec479895b3ee89bf52c) spent nearly $6,000 on Polymarket betting that the company exposed by ZachXBT would be Meteora, raising the probability by about 5% with a single trade.
About an hour after the order was placed on Polymarket, another address (0x2537C69391cD0bD00CE9E827E0680438cB0C87Aa) shorted the Meteora token MET three-fold on Hyperliquid, with a position value exceeding $33,000.
This timing coincidence led many onlookers to believe it was a manipulation of the market using Polymarket. A user named Bold on X admitted that the brilliance of ZachXBT's announcement about the investigation into insider trading lies in the fact that the company involved would know it was under investigation, allowing them to continue insider trading in the prediction market.
Whether this anonymous individual believed to have manipulated the market is associated with the target company or knows the insiders, this kind of "nested" behavior of insider trading in the market questioning "which company conducted insider trading" is quite ironic. Some users on X lamented that one could manipulate a token with a fully diluted valuation close to $200 million for less than $6,000, indicating that Polymarket has indeed lowered the threshold for market manipulation.
After my investigation, there is no on-chain evidence that these two addresses belong to the same person; the only evidence is the closeness in operational timing, which is quite weak. Furthermore, the address starting with 0x2537 ultimately suffered a loss and exited the short trade on Hyperliquid; the newly created address starting with 0x9b65 subsequently made a small bet that World Liberty Financial would be the subject of ZachXBT's exposure.
My conclusion is that these two trades that appear to be market manipulation are likely just a coincidence. If they were indeed executed by the same person, such unprofessional trading behavior can only be explained as testing. After placing a large bet on Meteora on Polymarket, the price of MET actually rose instead of falling, leaving no reason to choose a short trade at that time.
Some on X also mentioned that if this were indeed insider trading, MET should have crashed directly, and the probability on Polymarket would have skyrocketed, but given the current stable probability changes, this is likely not the case.
Just before publishing this article, Meteora co-founder Zen clarified the market's doubts, stating that since taking over Meteora in March last year, the team has always placed great emphasis on the risks of insider trading and has taken preventive measures. Zen stated that Meteora is a permissionless platform, thus the team usually only learns relevant information after the project is launched or integration is complete.
Although this incident may have been another false alarm due to market sensitivity, it genuinely provides a template for using Polymarket for market manipulation.
For example, recently the Federal Reserve began to mention interest rate hikes again. If there exists a market on Polymarket titled "Will the Federal Reserve start raising interest rates at xxx", market manipulators do not need to know insider information; they merely need to suddenly place a large bet on a certain option, which could trigger a market reaction and cause Bitcoin prices to fluctuate in the short term. Given that the liquidity of the order book on Polymarket is not high, manipulators could spend tens of thousands of dollars to achieve returns of dozens to hundreds of times in the contract market.
If you know the truth in advance, Polymarket can offer you substantial returns; in some way, this is the essence of prediction markets. Previously, when a new address appeared on Polymarket betting on a U.S. invasion of Venezuela, public sentiment was astonished that government insiders would personally leak information but did not excessively criticize insider trading.
This time, the extensive criticism on X, although ostensibly addressing insider trading, reveals a deeper concern: Polymarket has provided yet another low-cost tool for manipulating emotions in a market that has almost lost trust.
In other words, if this incident is indeed a market manipulation, and the price of MET was indeed affected, then the manipulator managed to use less than $6,000 to manipulate the valuation fluctuations of a $200 million project. Even more frightening is that the entire process has no barriers; all you need is a cryptocurrency browser plugin wallet and to place an order on Polymarket, which is essentially "just having hands."
Even if this incident is not factual, it is definitely worth sounding the alarm about the flaws in the Polymarket model once again: a platform that was originally thought to replace traditional news media has already become a fertile ground for insider trading. Past insider trading at least provided some truth in advance, but purely using influence for market manipulation has once again showcased the reckless pursuit of interests in an unregulated environment.
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