Polymarket has introduced new market integrity rules across its decentralized finance (DeFi) platform and its CFTC-regulated U.S. exchange, outlining how it enforces trading standards and handles suspicious activity.
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Clear Definitions on Insider Trading and Manipulation
The revised rules define three main types of prohibited insider trading: trading on stolen confidential information, trading on illegal tips, and trading by anyone with influence over an event outcome. Both platforms also ban various forms of manipulation, including spoofing, wash trading, self-dealing, front-running, and fictitious transactions.
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The latest update comes when Wall Street compliance desks are waking up to the fact that event markets can be used to trade on material non‑public information just as easily as equities or options.
JPMorgan and other large banks recently started looking at how to extend their insider‑trading and information‑barrier policies to platforms like Kalshi and Polymarket. This moved prediction markets from a regulatory grey zone into the core of their conduct‑risk frameworks.
Read more: CFTC Flags Insider Risks in Prediction Markets as Kalshi Sanctions Two Traders
Polymarket said the latest updates, detailed in the DeFi platform’s Terms of Use and the Polymarket U.S. Rulebook, reinforce measures against insider trading and market manipulation while promoting user protection and transparency. It launched dedicated Market Integrity pages to explain how these rules apply in practice and to guide users on reporting suspicious activity.
Additionally, it noted that it maintains a multi-tiered surveillance structure on both platforms. On its DeFi platform, all transactions occur on the Polygon blockchain , providing on-chain transparency.
Multi-Layered Surveillance Framework
The company is now working with technology partners to identify potential irregularities, with enforcement actions ranging from wallet bans to referrals to law enforcement.
On its U.S. exchange, oversight includes external trade surveillance experts, an internal real-time control desk, and a Regulatory Services Agreement with the National Futures Association (NFA) to investigate and sanction rule violations.
US regulators warned about insider risks in prediction markets after two recent KalshiEX cases showed traders abusing privileged information.
One involved an editor betting on contracts tied to a YouTube channel where he worked. In response, the CFTC’s Enforcement Division issued an advisory reminding traders and exchanges that insider dealing and fraud in these markets fall squarely under federal oversight.
