By Alexander Osipovich and Sam Kessler, The Wall Street Journal
Compiled by Chopper, Foresight News
The Wall Street Journal: The Mysterious Crypto Panel That Governs Polymarket Market Disputes
Last month, Garrick Wilhelm jumped into prediction market trading, but he soon began to regret it. The resident of British Columbia, Canada, signed up on the Polymarket platform and began placing bets on events related to the Middle East, including one wager on whether Israel and Hezbollah could reach a ceasefire agreement. Wilhelm invested $567 on the outcome failing, believing the armed group would never sign a ceasefire, calling it a sure win.
Subsequent to Israel and the Lebanese government reaching a ceasefire agreement, some traders interpreted this as equivalent to a truce with Hezbollah; however, after carefully reviewing the platform’s rules, Wilhelm firmly disagreed with this assessment.
The outcome of this bet involving millions of dollars was not decided by the Polymarket platform. Wilhelm only then learned that his trade’s resolution was arbitrated by a loosely organized group of individuals holding cryptocurrency tokens.
With a surge in new users and explosive growth in trading volume, dispute resolution has become an increasingly challenging issue for prediction market platforms like Polymarket. Although the platform originally aimed to frame betting topics as clear, yes-or-no questions, real-world events are often complex, making the determination of outcomes ambiguous.
Most similar prediction market platforms, such as Kalshi, resolve disputes and determine final outcomes themselves; however, Polymarket outsources dispute resolution to the third-party service UMA. When parties disagree on payout outcomes, the UMA voting mechanism is triggered, with voting power held by UMA token holders—those with larger token holdings have greater voting weight, and the vast majority of voters remain anonymous.
Polymarket explicitly states in its user agreement that the platform assumes no responsibility for resolving disputes related to trading contracts.
Many traders and seasoned crypto industry insiders have直言 that this UMA voting system is highly susceptible to fraud. Token holders can freely vote on disputes in which they have a vested interest, with no institutional constraints.
The Wall Street Journal, combining Polymarket trading data with on-chain information, found that at least 60% of active UMA voters over the past year could be linked to Polymarket trading accounts; in over 300 dispute cases during the same period, UMA voters were found to have open positions in the disputed betting markets.
UMA markets itself as decentralized, but on-chain data shows that voting power is highly concentrated among a few large holders. Statistics indicate that in the vast majority of dispute votes, the top ten wallet addresses account for more than half of the votes.
Nic Carter, co-founder of venture capital firm Castle Island Ventures, bluntly stated that Polymarket should not continually shirk responsibility for dispute resolution. “Resolving disputes is inherently Polymarket’s duty—it should not be outsourced to anonymous third-party token holders whose identities are unknown.”
A spokesperson for Polymarket stated that only 0.2% of betting contracts on the platform trigger UMA voting adjudication, and added that UMA disperses adjudication authority into the open market system rather than entrusting it to a single entity for unilateral decision-making.
In March this year, Polymarket founder Shayne Coplan acknowledged at a Harvard Business School forum that the platform’s current dispute resolution mechanism has significant vulnerabilities. “Optimizations are imminent,” he said, without disclosing specific details of the changes. It is known that Polymarket has entered into a data partnership with Dow Jones, the parent company of The Wall Street Journal.
UMA was co-founded by two former Goldman Sachs traders and is governed by the Risk Labs Foundation, registered in the Cayman Islands. James Fry, a spokesperson for the foundation, stated that no concrete evidence has been found indicating that the UMA platform manipulates trades. “Most of the external skepticism is simply traders who have lost bets looking for excuses.”
In the event of a dispute, UMA token holders engage in discussions on the Discord social platform, citing various supporting materials to substantiate their positions. Additionally, UMA has a penalty mechanism that imposes economic sanctions on users who vote with the minority opinion, with the platform stating that this is designed to encourage voters to make accurate, fact-based decisions.
According to Betmoar, Polymarket’s exclusive trading terminal, over 1,150 betting disputes have occurred on the platform since 2026, surpassing the total for all of 2025.
Another recent hotly debated betting market centered on streamer Clavicular’s official announcement of preparing for pregnancy: the streamer did publicly announce that their partner is pregnant, but many traders argued this announcement did not meet the contract’s definition of a “formal valid statement.” Ultimately, UMA voting ruled that this announcement was compliant. Additionally, multiple ruling discrepancies have emerged in bets related to the situation in Iran.
Public regulatory filing documents show that Polymarket initially handled all disputes internally; in early 2022, the platform reached a settlement with the U.S. Commodity Futures Trading Commission over alleged violations of U.S. financial regulations, since then delegating full authority over dispute resolution to UMA. This model, relying on decentralized token holder adjudication, has become a key argument for Polymarket to assert that it operates as an offshore platform not subject to U.S. regulatory oversight.
However, Polymarket occasionally overrides UMA’s final rulings and provides additional clarifications on betting contract terms in advance to avoid potential disputes.
As mentioned earlier, novice trader Wilhelm ultimately lost this bet related to the ceasefire agreement, as 87% of UMA token voters determined that the Israel-Lebanon ceasefire agreement applied to the Hezbollah-related wager. Despite Wilhelm and other parties presenting their arguments, the ruling could not be overturned.
A group of losing traders formed a Discord community called "Whale Hunters" to collectively denounce suspected backroom dealings by top UMA voting users.
Traders have directed their attention toward the startup project UMA.rocks, a platform that enables UMA token holders to consolidate their voting power and delegate voting rights to a specialized decision-making committee. In recent contentious votes, UMA.rocks has accounted for 8% of the total votes and is regarded by the market as a key indicator of UMA’s overall governance direction.
Lancelot Chardonnet, founder of UMA.rocks, responded: “Many traders incur losses because they fail to carefully read the betting rules, yet afterward blame UMA and our platform entirely — we are the easiest target.”
At the end of April, UMA.rocks officially removed Scout from the voting committee due to suspected market manipulation in their past conduct.
The journalist contacted Scout via Discord, who denied manipulating the market or deliberately influencing incorrect voting outcomes, but openly admitted to placing bets on the Polymarket dispute while exercising his UMA dispute resolution voting rights.
Scout believes that voting participants with a vested interest in the outcome are more likely to reach a ruling that aligns with the facts. “Voters with no stake in the matter might spend just five minutes skimming the basics; as traders holding positions, we have a financial incentive to thoroughly investigate the full context and make an accurate judgment.”
He admitted that the industry is caught in a dilemma: “Either involve traders with conflicts of interest in decision-making, or leave voting to laypeople with no professional expertise—there is currently no perfect solution.”
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