The New Frontier of Insider Trading

In the hours before the February 28, 2026 U.S.-Israeli strike on Iran—one of the most closely guarded military operations in recent history—six newly created Polymarket wallets collectively earned approximately $1.2 million by purchasing ‘Yes’ shares in the ‘US strikes Iran by February 28?’ contract at prices as low as $0.10. One account, operating under the handle ‘Magamyman,’ placed its first trade seventy-one minutes before the news broke, when markets implied only a 17% probability of a strike. When those markets resolved in the affirmative, the account’s profits totalled approximately $553,000.

This episode is striking because it is hardly the first time this has occurred. Two months earlier, a pseudonymous Polymarket account called ‘Burdensome-Mix’ earned roughly $485,000 from a $38,500 investment in contracts tied to the capture of Venezuelan President Nicolás Maduro—placing its largest trades just hours before a covert military operation was publicly announced. Israeli authorities separately indicted a civilian and an IDF reservist for allegedly using classified wartime information to profit on Polymarket. A trader earned over $1 million by predicting with uncanny precision the results of Google’s proprietary Year in Search rankings. Another appeared to have advance knowledge of OpenAI’s browser launch. And a user named ‘romanticpaul’ purchased Taylor Swift engagement contracts aggressively in the days before Swift publicly announced her engagement to Travis Kelce.

These cases are not merely colorful anecdotes. They represent a systematic challenge to the legal and regulatory frameworks that govern the use of inside information in connection with trading in traditional instruments like stocks, bonds and futures. Our paper, From Iran to Taylor Swift: Informed Trading in Prediction Markets, presents the first systematic empirical and legal study of this phenomenon.

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