...
By Hugh Cameron
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
During the Iran war so far, traders have staked hundreds of millions of dollars on prescient, perfectly timed bets—fueling speculation among market watchers about whether some participants may have had advance knowledge of decisions shaping the conflict.
The activity has unfolded across both traditional and emerging markets, raising questions about possible insider trading.
A notable trade at the start of the week sparked alarm bells.
Read More on World
At 7:23am on Monday, President Donald Trump posted on Truth Social a sudden reversal in war plans—he was postponing strikes on Iran’s energy grid because the U.S. had begun ceasefire talks with Iran and made progress.
The post came out of the blue for a market that had been steeling itself for strikes. But not everyone appeared to be caught off guard. In the narrow 15-minute window before the announcement, some market participants placed roughly $500 million in oil futures trades.
Exchange data cited by Reuters showed that between 6:49 a.m. and 6:50 a.m., roughly 5,100–6,200 Brent and West Texas Intermediate (WTI) crude futures contracts changed hands—equivalent to more than half a billion dollars in notional value.
The oil price immediately plunged after Trump's post, and when markets opened, those traders pocketed a sizeable profit.
Was it just a smart gamble? The oil price has been extremely volatile in the weeks since Iran choked off flows through the Strait of Hormuz, leading to the price soaring 60 percent since the start of the year to around $100 per barrel for crude now. It has oscillated on any good or bad news about the war’s duration.
- Analyst Warns Oil Price Could Go Higher Than Ukraine War Peak
- Iran Knows How To Fight A War Without Friends. Does The US?
But Monday’s spike went beyond that, with contract volumes at least 8-10 times larger than typical levels for that time of the day. Many analysts are viewing the scale and the timing of those trades as cause for suspicion.
That Monday morning there had been no indication of talks having even commenced between the U.S. and Iran, Mukesh Sahdev, a chief oil analyst at the commodities research firm XAnalysts told the BBC.
“So to place so much money on oil going down raises questions," he said.
There is no public evidence that the trades were illegal, and no regulator has accused any individual of wrongdoing.
...
Tyler Gellasch, a former Senate investigator and President of the Healthy Markets Association, an investor-focused nonprofit, told Newsweek that “in a vacuum, the trades wouldn’t likely make a ton of news,” given it is “relatively easy to imagine an innocuous reason for making a large oil trade at a time of conflict in the Middle East.”
However, he went on to say that it would be “shocking” if regulators, prosecutors and congressional leaders “didn’t take a deep dive” into this case.
The White House remains assured that no private information is being capitalized on by administration officials, whether on traditional platforms or the more heavily scrutinized prediction markets.
“All federal employees are subject to government ethics guidelines that prohibit the use of nonpublic information for financial benefit,” White House spokesperson Kush Desai told Newsweek, adding that “any implication that administration officials are engaged in such activity without evidence is baseless and irresponsible reporting.”
Insider trading generally refers to buying or selling assets based on material, nonpublic information in breach of a duty of trust or confidence.
Online Prediction Markets
But speculation around insider trading has persisted throughout this war, in large part due to the emergence of online trading platforms like Polymarket and Kalshi which give people the opportunity to wager and profit from the war and other geopolitical events.
Throughout this war, users on Polymarket have been given options to bet on everything from changes in Iranian leadership to the U.S. sending in ground forces, and even nuclear detonation—a contract removed by the site in early March after fierce public criticism.
More than $500 million was bet on a collection of Polymarket contracts linked to the timing of the first U.S.-Israeli strikes on Iran. Six accounts—dubbed “suspected insiders” by the blockchain analytics platform Bubblemaps—were able to make $1.2 million by successfully betting these would take place on February 28.
While U.S. military action was considered a possibility, a massive bombing campaign is rarely telegraphed in advance and so the “unusual volume, sudden funding before key events, and precise timing” of the bets, as well as the fact many of these accounts had never made a trade before, was considered “compelling,” according to Bubblemaps CEO Nicolas Vaiman.
And as the war approaches the one-month mark, scores more of similar wagers have aroused further fears of people profiting from advance knowledge—highlighted by CNN reporting on Tuesday that one trader on Polymarket pocketed nearly $1 million by hitting 93 percent of their Iran-related wagers over the past two years, mostly concerning the likelihood and timing of U.S. and Israeli military actions against the country.
High predictive accuracy alone does not establish wrongdoing, but analysts say the timing and funding patterns warrant scrutiny.
Vaiman told Newsweek this particular user’s “history of highly accurate and well-timed predictions” bore all the hallmarks of suspicious activity, such as bets made shortly before separate attacks and often when the market assigned odds of under 30 percent.
“The broader market viewed these events as unlikely, yet the trader consistently positioned ahead of them.”
He said insider trading on online prediction markets is easier to do because the platforms aren't as regulated as traditional share markets.
“On many prediction platforms, you just need a wallet to trade,” he told Newsweek. “It’s easy to create one and there’s often no direct link to your real identity. That makes it much simpler to act on early information without feeling immediately exposed.”
Additionally, the very nature of military operations themselves may create further opportunities. Decisions to launch strikes on another country are rarely confined to a single leader or even their cabinet, involving legions of military planners, analysts, advisers, diplomats and aides often spanning multiple agencies and even nations.
And while “militaries themselves are sensitive about keeping their secrets,” Robin Hanson, a founding theorist of modern prediction markets, told Newsweek. “When you’re doing stuff, there’s more secrets to keep.”
“When you combine a wide circle of potential insiders with anonymous access to a market that lets you bet directly on a specific event, the temptation is obvious,” added Vaiman.
...
Calls To Stamp Out Market Manipulation
Amid speculation that certain users may be privy to and profiting from nonpublic intel on the war, Politico reported on Wednesday that lawmakers were preparing to introduce bipartisan legislation banning members of Congress as well as senior executive branch officials, including the president himself, from betting on prediction market contracts relating to politics.
And after separate legislation was introduced aiming to curb sports-related contracts, both Polymarket and its more-tightly regulated rival, Kalshi, this week announced their own set of guardrails to clamp down on “insider trading and market manipulation.”
And while labelling the move “a step in the right direction by Polymarket,” Vaiman said enforcement may prove difficult, as the platform’s blockchain-based infrastructure and reliance on crypto wallets obscures user activity within a web of technological decentralization.
This effective anonymity complicates tracking efforts, proving one profited off of insider information is equally thorny, and the incentives on offer mean that “the reward for cheating often outweighs the risk of getting caught,” he said.
When approached for comment, Kalshi noted that it does not "allow markets directly tied to death or war," and said Monday's announcement "builds off of the extensive work we've been doing to ban and police insider trading."
Newsweek contacted Polymarket via email for comment.
But aside from Monday’s trades or any single well-timed wager, Gellasch said the now-commonplace headlines of individuals profiting from eerily accurate predictions means “many folks are just coming to the sad conclusion that the markets are rigged.”
This perception, he warns, calls into question the “integrity and viability of our markets,” dissuading honest brokers from taking part and encouraging others to see if they themselves can push the boundaries of acceptable financial practice.
But even as lawmakers and the platforms themselves move to tighten rules around potential insider trading, the prevalence of lucrative, suspiciously-timed wagers may now be leading some to treat prediction markets as almost poll-like forecasting tools.
Roughly 260 Polymarket contracts tied to future developments in Iran are currently open. Some $30 million has been staked on the U.S. and Iran agreeing a ceasefire by Tuesday, though the odds currently stand at a mere 13 percent.
By contrast, users believe the probability of American forces entering the country by the same date has risen to 24 percent—up from 16 percent on Wednesday.
In a polarized era, the center is dismissed as bland. At Newsweek, ours is different: The Courageous Center—it's not "both sides," it's sharp, challenging and alive with ideas. We follow facts, not factions. If that sounds like the kind of journalism you want to see thrive, we need you.
When you become a Newsweek Member, you support a mission to keep the center strong and vibrant. Members enjoy: Ad-free browsing, exclusive content and editor conversations. Help keep the center courageous. Join today.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines