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Polymarket Tightens Insider Trading Rules – Crypto News

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4 months ago

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The prediction market is updating insider trading and manipulation rules days after inking an exclusive partnership with Major League Baseball.

Polymarket on Monday announced updated market integrity rules across both its DeFi platform and its CFTC-regulated U.S. exchange, amplifying requirements governing insider trading and market manipulation. The new standards appear in the DeFi platform’s Terms of Use and the Polymarket US Rulebook.

“Markets thrive on clarity,” said Neal Kumar, Polymarket’s chief legal officer, in a release.

Prohibited Behavior

The rules spell out three categories of banned insider trading conduct. First, participants may not trade on any contract if they possess confidential information about the outcome of the underlying event, where using that information would violate a preexisting duty of trust or confidence.

Second, participants may not trade on confidential information passed to them by someone who owed a preexisting duty of trust or confidence to someone else, if they know or have reason to know that the tipper would be prohibited from trading on it themselves.

Third, participants may not trade on any contract if they hold a position of authority or influence sufficient to affect the outcome of the underlying event.

Beyond insider trading, both platforms prohibit all types of fraud and market manipulation — including spoofing, wash trading, and fictitious transactions — as well as self-dealing, front-running, information misuse, attempted manipulation, and disruptive practices.

Enforcement

On the DeFi side, Polymarket maintains a multi-layered monitoring system and partners with surveillance and technology specialists, and all trades are executed on the Polygon blockchain, providing built-in on-chain transparency. When the platform or community flags unusual activity, Polymarket said it may ban wallet addresses or refer the matter to law enforcement.

On Polymarket US, surveillance operates at three levels: partnerships with trade surveillance specialists, a control desk conducting real-time monitoring, and a Regulatory Services Agreement with the National Futures Association to detect rule violations and investigate offenders. Sanctions on the U.S. exchange can include suspension, termination, monetary penalties, or regulatory referrals.

The rule overhaul follows last week’s announcement that MLB named Polymarket its official and exclusive prediction market exchange. The deal centers on an integrity framework that restricts markets deemed to pose manipulation risk, including contracts on individual pitches, manager decisions, and umpire performance. MLB also signed an information-sharing agreement with the CFTC, the first such deal between the derivatives regulator and a professional sports body.

Polymarket received CFTC approval to operate in the U.S. in November 2025, following a $2 billion strategic investment from Intercontinental Exchange. The platform has since begun rolling out its U.S. app, starting with sports markets.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.

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