A Columbia University investigation found that a significant portion of Polymarket’s trading activity was inflated by artificial wash trading, although the platform itself was not directly responsible.
summary
- According to the researchers, wash trades accounted for about 25% of all trades in polymarkets over the past three years.
- The study found that sports markets were the most heavily manipulated, while crypto-related markets saw minimal impact.
- The findings come as Polymarket hits record highs in trader numbers and trading volumes following the announcement of the upcoming POLY token launch and US re-entry plans.
As first reported by Bloomberg, a new study by Columbia University researchers reveals that polymarket trading activity is significantly inflated by “artificial” wash trading.
The study found that over the past three years, nearly one in four trades on Polymarket were the result of wash trades, where the same trader repeatedly buys and sells assets to fuel volume indicators.
An analysis conducted by Columbia Business School professor Yash Kanoria and his team examines the scale of wash trading across market categories, with sports at an all-time high of 45%, elections at 17%, political markets at 12%, and crypto-related markets at 3%.
However, the researchers noted that while prediction market platforms may have enabled the manipulation, they were not directly involved in the manipulation.
A Polymarket spokeswoman said the company was reviewing the findings and declined further comment.
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Polimarket and Calsi hit new highs, prediction market sector booming
These findings come as Polymarket enters its strongest growth phase to date, marked by record user active traders and trading volumes. In October, the platform attracted more than 477,000 active traders, a 48% increase from the previous month, and total trading volume soared to more than $3 billion, more than double September’s numbers.
This surge followed the announcement and subsequent airdrop of the POLY token, as well as plans to re-enter the US market following previous regulatory restrictions by the Commodity Futures Trading Commission.
Polymarket’s momentum also reflects a broader boom in the prediction markets space. Rival platform Karshi recorded more than $4.4 billion in trades during the same period, and speculative market participation surged across the industry.
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