Polymarket faces wash trading allegations on Ethiopian and Romanian election markets
Over $600 million in trading volume on two election markets appears to involve coordinated account manipulation after outcomes were determined.
What happened
Polymarket's offshore platform processed over $600 million in trading volume across two political election markets—one on Ethiopia's 2024 federal elections and another on Romania's 2024 race—with unusual patterns suggesting market manipulation. In the Ethiopia market, just $173,000 was traded on Prime Minister Abiy Ahmed (who won decisively with 438 parliamentary seats), while over $41 million traded on his chief of staff Shimelis Abdisa becoming leader, totaling over $285 million on losing candidates. Nearly all of this volume—about $284 million—came from pairs of accounts repeatedly buying and selling with each other, according to forensic analysis by MSR Decode. The Romania market saw even more dramatic anomalies, with an algorithm identifying 99.6 percent of volume in certain weeks as suspicious. Polymarket flagged and blocked the accounts involved, though it did not explain why they were permitted to trade such high volumes before intervention.
Context
Prediction markets are marketed as accurate forecasting tools. Kalshi, for example, beat many pollsters in forecasting the outcome of the 2024 U.S. presidential race. However, these markets can be vulnerable to manipulation that distorts their price signals and volume data. The Ethiopia market remained open for 123 days after the election outcome was determined, creating what researchers call a "zombie market" where trading continued on already-decided events. MSR Decode's analysis found the most likely explanation for the anomalous trading is "activity farming"—artificially inflating trading volumes to boost accounts ahead of a potential Polymarket cryptocurrency token launch, which the platform's chief marketing officer confirmed would occur in 2025 without providing details. This behavior parallels documented "airdrop farming" patterns in the cryptocurrency industry. Wash trading, which is prohibited in Polymarket's terms of service and banned on regulated U.S. exchanges, creates an illusion of market activity without actual price discovery, potentially misleading users about genuine market sentiment.
What's disputed
Whether the anomalous trading definitively constitutes wash trading versus activity farming or other explanations remains uncertain due to unknown trader identities. Researchers note that "what appears to be wash trading isn't always wash trading," and only the accounts' behavior patterns are visible to analysis, not their intent.