A failed market manipulation became a blueprint for abusing Polymarket
Original author: Eric, Foresight News
On the evening of February 23 Beijing Time, ZachXBT announced on X a major revelation: on February 26, he will disclose an investigation into one of the most profitable companies in the cryptocurrency industry, exposing long-term insider trading by its employees using internal data.
As of the time of writing, this tweet has been viewed over 8.5 million times. Under the crypto bear market, the title of "most profitable company" strikes a nerve with retail investors, sparking a massive no-prize guessing game on X.
As the leader in prediction markets, Polymarket clearly isn’t missing out on this surge of opportunity and traffic. The market on “Which company will be exposed by ZachXBT” has now become the second most popular, behind only the prediction market on when the U.S. will attack Iran. Although trading volume still doesn’t rival that of Bitcoin’s 5-minute price movement, the topic has generated maximum buzz.
At the market's inception, many believed the chosen "lucky one" would be World Liberty Financial, especially given the highly suggestive incident involving Eric Trump, the project's co-founder and the U.S. president's second son, deleting his tweet.
But over time, Meteora was pushed to the top of the probability list, and an operation involving a newly created address gave the market a whiff of conspiracy.
At approximately 7:00 AM Beijing time on February 24, a newly created address (0x9b65a8d272ef7daeba9ebec479895b3ee89bf52c) spent nearly $6,000 on Polymarket to bet that the company exposed by ZachXBT would be Meteora, increasing the probability by approximately 5% in a single transaction.
About an hour after placing the order on Polymarket, another address (0x2537C69391cD0bD00CE9E827E0680438cB0C87Aa) opened a 3x short position on the Meteora token MET on Hyperliquid, with a position value exceeding $33,000.
This timing coincidence led many onlookers to believe it was a market manipulation exploiting Polymarket. The X user named Bold admitted that the clever aspect of ZachXBT’s announcement of an insider trading investigation is that the involved company will know it is under investigation, yet can still continue insider trading on the prediction market.
It is highly ironic that whether this anonymous individual, suspected of market manipulation, is an insider at the target company or someone with inside knowledge, engaging in insider trading on a market centered around “which company engaged in insider trading” is a form of nested absurdity. Some X users remarked that it is astonishing how a project with an FDV nearing $200 million could be manipulated with less than $6,000, highlighting how Polymarket has indeed lowered the barrier to market manipulation.
After my investigation, there is no on-chain evidence that these two addresses belong to the same person; the only basis is the similarity in timing, which is highly speculative. Additionally, the address starting with 0x2537 incurred losses and exited its short position on Hyperliquid; the newly created address starting with 0x9b65 later made small bets on Polymarket that World Liberty Financial would be exposed by ZachXBT.
My conclusion is that these two trades, which appear to be market manipulation, are most likely just a coincidence. If they were indeed carried out by the same person, such unprofessional trading behavior can only be explained as testing. After placing a large bet on Meteora on Polymarket, MET’s price rose rather than fell within the next hour—there is no logical reason to choose a short position at this time.
Some on X have also said that if this were insider trading, MET should have crashed immediately, and the probabilities on Polymarket should have surged—but given the current stable changes in probability, this is likely not the case.
Shortly before posting this article, Meteora co-founder Zen clarified concerns about the market, stating that since taking over Meteora in March last year, the team has placed strong emphasis on mitigating insider trading risks and has implemented preventive measures. Zen noted that Meteora is a permissionless platform, so the team typically only becomes aware of relevant information after a project has been launched or integrated.
Although this incident may have been another case of market overreaction, it genuinely provides a template for market manipulation using Polymarket.
For example, if the Federal Reserve recently began hinting at rate hikes and there was a market on Polymarket titled “The Federal Reserve will initiate a rate hike on xxx,” a market manipulator wouldn’t need insider information—just a large bet on one outcome could trigger a market reaction and cause short-term volatility in Bitcoin’s price. Given the low liquidity on Polymarket’s order book, a manipulator might spend only a few thousand to tens of thousands of dollars to achieve returns tens or even hundreds of times greater on the derivatives market.
If you knew the truth in advance, Polymarket could offer you substantial returns—that’s essentially the point of prediction markets. Previously, when new addresses on Polymarket bet on the U.S. invading Venezuela, public reaction was merely astonishment at how insiders would personally leak such information, with little condemnation of insider trading.
This wave of criticism on X, while表面上 still focusing on insider trading, is truly driven by people's underlying fear: Polymarket has provided another low-cost tool to manipulate sentiment in a market where trust has nearly collapsed.
In other words, if this incident was indeed market manipulation and MET’s price was genuinely affected, then the manipulator managed to move the market value of a $200 million project with less than $6,000. Even more alarming is that there are no barriers to this process—you only need a cryptocurrency browser extension wallet and the ability to place an order on Polymarket, making it essentially “anyone can do it.”
Even if this incident is not factual, it is absolutely worth sounding the alarm again on the flaws of Polymarket’s model: a platform once thought to replace traditional news media has become a breeding ground for insider trading. Past insider trading at least provided some truth in advance, but the mere exploitation of influence to manipulate markets once again demonstrates the unchecked nature of profit in permissionless environments.
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