Prediction Markets Record Volume, Kalshi Controversy And Insider Trading Allegations
Prediction markets recorded historic volumes in late February and early March 2026, as coordinated U.S.-Israeli strikes on Iran triggered a wave of geopolitical betting that broke platform records and surfaced serious allegations of insider trading. Polymarket processed $478 million in notional daily trading volume on strike day, while rival platform Kalshi found itself at the center of a regulatory and ethical firestorm over how it handled a market tied to the death of Iranian Supreme Leader Ali Khamenei.
Polymarket Breaks All-Time Volume Record
When joint U.S.-Israeli strikes hit Iran on February 28, Polymarket’s infrastructure absorbed a surge of capital that shattered every benchmark the platform had previously set. On-chain data published by analyst defioasis.eth confirmed $478 million in notional trading volume within a single 24-hour window. Politics-category markets alone generated $220 million, representing 46.2% of total platform activity for the day. Polymarket Builders also recorded its own single-session high during the same period.
Individual contracts reflected the scale of liquidity. The series of “US strikes Iran” markets had been live since December 2025, accumulating over $529 million in aggregate volume. The specific contract asking whether strikes would occur before February 28 drew approximately $90 million on its own, with certain trades clearing up to $90 million in a single transaction. Following Khamenei’s confirmed death, Polymarket spun up more than a dozen Iran-related contracts, including a Khamenei removal market that pulled in $45 million. Traders were pricing a 46% probability that the Iranian regime falls by June 30.
Bitcoin BTC$77,250.00▲1.50%
Ethereum ETH$2,109.21▲1.97%
Tether USDT$0.9990▲0.03%
BNB BNB$661.00▲1.72%
XRP XRP$1.35▲1.39%
USDC USDC$0.9997▼0.00%
Solana SOL$85.28▲1.61%
TRON TRX$0.3715▲1.98%
Figure Heloc FIGR_HELOC$1.03▲0.00%
Dogecoin DOGE$0.1022▲1.46%Insider Trading Allegations Emerge from Blockchain Analytics
The record volume came with a shadow. Blockchain analytics firm Bubblemaps identified six wallets that collectively generated approximately $1 million in profits by betting on U.S. strikes against Iran, with positions opened hours before explosions were first reported in Tehran.
The wallets shared several characteristics that drew scrutiny:
- All six were created in February 2026, with most funded within 24 hours of the strikes
- Activity was concentrated almost exclusively on timing-specific Iran strike contracts
- Shares were acquired at roughly $0.10, yielding substantial returns upon settlement
- All six accounts liquidated their full positions after the contracts resolved
The most profitable of the group converted approximately $61,000 into gains exceeding $493,000. An account named “Planktonbets” earned $173,907 across seven contracts, having previously placed smaller losing bets on alternative strike dates, suggesting an effort to time the event precisely. “Neodbs” achieved a 900% return, turning $9,884 into roughly $89,000.
Bubblemaps CEO Nicolas Vaiman was measured in his assessment. “It’s almost impossible to be 100% certain in these cases, but given the size of the bets, the freshly funded wallets, and the timing, it felt convincing enough to share,” he told The Block. That caution reflects a persistent challenge for decentralized platforms: on-chain transparency surfaces patterns, but pseudonymity complicates attribution.
Not every participant won. A trader identified as “anoin123” had accumulated over $2 million betting against strikes during the preceding months. When the operation materialized, that position collapsed, producing $6.5 million in losses within 24 hours. The swing from profit to a $4.5 million deficit in a single session illustrates the asymmetric risk embedded in high-conviction geopolitical bets.
This is not the first time Polymarket has faced these questions. In January 2026, a newly created account wagered $32,000 on Venezuelan President Nicolas Maduro’s removal at 7 cents per share, collecting over $400,000 before public confirmation. Earlier, Israeli authorities charged an IDF reservist and a civilian for allegedly using classified military data to trade on contracts tied to Israel’s June 2025 strike against Iran. Congressman Ritchie Torres is now advancing legislation that would prohibit federal employees from participating in prediction markets involving government actions.
Kalshi’s Khamenei Market Draws Regulatory Pressure
While Polymarket grappled with insider trading concerns, Kalshi faced a different category of criticism. The CFTC-regulated platform’s contract titled “Ali Khamenei Out as Supreme Leader?” accumulated over $50 million in total trading volume, with roughly $20 million changing hands on Saturday alone, according to analyst Dustin Gouker.
When Khamenei was confirmed dead following the strikes, Kalshi’s settlement process became contested. The CFTC-filed contract terms referenced the “last traded price prior to the death,” while the market page displayed “last traded price prior to confirmed reporting of death.” Hours of active trading occurred in the gap between his actual death and public confirmation, creating ambiguity about which positions were valid.
CEO Tarek Mansour addressed the situation directly on X: “We don’t list markets directly tied to death. When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death.” Under the final settlement framework, traders who held positions before Khamenei died received payouts at the last-traded price recorded at 1:14 AM ET Saturday. Those who entered after his death received full refunds. Kalshi also announced it would reimburse all trading fees from the market.
Critics pointed to an earlier Kalshi market asking who would attend Trump’s inauguration. When Jimmy Carter died in late December 2024, that contract settled to “No.” The contrast with the Khamenei settlement prompted blowback, with one widely circulated post arguing: “You settle on death, just not when it makes you money.”
Former SEC chief of staff Amanda Fischer described Kalshi’s promotional post during the strikes, which highlighted surging odds on Khamenei’s removal, as “more or less offering a proxy market on assassination.” Six Democratic senators, led by Adam Schiff, subsequently sent a letter to CFTC Chairman Michael Selig urging the agency to ban contracts that resolve on or correlate to an individual’s death.
A Record Week That Raises Structural Questions
Separately, a trader operating across three linked wallets earned $2.35 million on Polymarket within a single month by betting on Bitcoin price direction, according to Lookonchain data. The trader began activity on February 1, 2026, using a straightforward long-short strategy on BTC, with occasional positions on ETH and SOL. Bitcoin’s recent move to $68,000 contributed to favorable conditions for directional bets.
Taken together, the events of late February and early March present prediction markets at an inflection point. The infrastructure works: Polymarket priced geopolitical risk in real time, faster than traditional financial instruments or polling models. The volume figures confirm genuine liquidity and participation. The harder questions concern governance, fairness, and the line between sophisticated forecasting and trading on privileged information. Regulators and platform operators will have to answer those questions together, because the market clearly is not waiting.
