Polymarket has launched an audit of several startups that provide copy-trading tools, amid concerns that these platforms are enabling users to profit from suspected insider trading. The prediction market, which is currently seeking a valuation near $20 billion, is investigating the companies that participated in its "Builders Program" to determine if they are facilitating the exploitation of nonpublic information.
According to a report by The Information, the audit targets developers who built applications on top of Polymarket’s technology. These apps allow users to track the activity of successful traders and replicate their bets. Some of these platforms actively market their ability to identify "insiders" before the broader market reacts.
Startups Under Scrutiny
One developer, Polycool, explicitly advertises a "guide to Polymarket insider trading" on its website. The site claims that because the platform is a decentralized prediction market, users do not face the same legal risks associated with insider trading in traditional equity markets. Another startup, Kreo, offers services that help users "find insiders before the rest."
These copy-trading applications have significantly boosted volume on Polymarket, contributing hundreds of millions of dollars in activity. The apps typically charge a fee to provide customers with lists of high-performing traders or alerts regarding unusually large, well-timed bets.
Polymarket introduced its Builders Program last November to encourage third-party development, but the initiative has drawn unwanted attention. The platform has struggled with regulatory scrutiny regarding market integrity, competing with rivals like Kalshi to curb illicit behavior.
Last month, Polymarket implemented more rigorous rules and enforcement mechanisms to address insider trading concerns. The current audit represents the latest effort to distance the platform from services that exploit information asymmetries. Polymarket did not immediately respond to requests for comment regarding the scope of the audit or potential disciplinary actions against the developers.