Cryptocurrency-based prediction market Polymarket has turned to blockchain analytics firm Chainalysis to monitor trading activity and enforce its market rules, as it works to address concerns about insider trading and market integrity.
Chainalysis offers a suite of tools, including research software and on-chain monitoring systems, to detect suspicious behavior, based on a model designed to identify patterns consistent with traders acting on non-public information, the companies announced Thursday.
The move comes amid increasing scrutiny of prediction markets. Critics have argued that platforms like Polymarket could be vulnerable to insiders (such as political operatives or corporate employees) making informed bets before the information is made public. In traditional finance, such activity is illegal and closely monitored. In cryptocurrency-based markets, the application of the law has been less clear.
Polymarket’s response is to rely on blockchain transparency. Because each operation is recorded on-chain, activity can be tracked and analyzed after the fact. By overlaying Chainalysis data tools, the company aims to detect suspicious transactions in real time and, if necessary, share evidence with regulators.
In simple terms, Polymarket is bringing in a digital police force of sorts. The goal is to demonstrate that even in a decentralized environment the rules can be enforced. The broader goal is to reposition Polymarket as a credible financial platform rather than a crypto betting site.
“Polymarket was built on-chain because transparency matters, and our platform shows what markets can look like when operations are open, traceable and accountable by design,” said CEO Shayne Coplan.
Coplan has argued that prediction markets serve a broader purpose than speculation. He described them as “a very useful thermometer of the world,” where prices reflect the probability of real-world outcomes, at an event in New York this week.
Still, that utility depends on trust. If users believe that markets are being skewed by insiders, prices become less reliable. That risk has increased as Polymarket has expanded, gaining widespread attention during events like elections and attracting both retail traders and institutional interest.
Coplan has emphasized building something lasting, focusing on products that “last” rather than chasing short-term trends.
