Polymarket Audits Copy-Trading Apps Over Insider Concerns

TLDR

• Polymarket has launched an audit of copy trading startups over insider trading concerns.
• The review targets apps built through Polymarket’s Builders Program.
• Some startups reportedly shared suspected insider accounts with their users.
• The copy trading apps allow customers to mirror trades from high-performing accounts.
• The app flags large or unusual bets that may rely on nonpublic information.

Polymarket has started auditing several app startups over insider trading concerns, according to The Information. The review targets copy-trading apps built through its developers program. The move follows rising scrutiny of insider trading activity on prediction markets.

Polymarket Reviews Builder Apps Over Insider Trading Concerns

Polymarket launched an audit of startups that track high-performing traders, The Information reported Tuesday. The company seeks a valuation near $20 billion. It began reviewing apps that may help users copy trades tied to nonpublic information.

The report said Polymarket faced pressure to curb insider trading before launching its Builders Program last November. The program supports outside developers who send trades to its platform. However, some startups later shared suspected insider accounts with their own customers.

These startups operate copy-trading apps that monitor trader activity on Polymarket. They provide lists of accounts with strong winning streaks. They also flag large or unusually timed bets that may rely on confidential information.

Customers can then use bots to mirror those trades in real time. They can also receive alerts about specific market moves. The apps charge subscription fees for these services.

The Information said these apps boosted Polymarket trading volume by hundreds of millions of dollars. As a result, trading activity increased sharply across several markets. However, concerns over insider trading activity also grew.

Polymarket introduced clearer rules on insider trading last month. The company outlined enforcement measures to address suspicious behavior. It did not immediately respond to requests for comment.

Copy-trading Startups Raise Compliance Questions for Polymarket

One startup in the Builders Program, Polycool, promotes insider trading strategies on its website. Polycool offers what it calls a “guide to Polymarket insider trading.” The site states, “This isn’t the stock market, where using nonpublic information will land you in jail.”

Polycool also says, “The rules for decentralized prediction markets are a completely different game.” The statements appear on its public website. The Information cited those comments in its report.

Another startup, Kreo, markets tools to identify potential insider accounts early. Kreo advertises services that help users “find insiders before the rest.” The app tracks trading patterns and highlights specific wallets.

Both Polycool and Kreo participated in Polymarket’s Builders Program. Developers in the program create applications on top of Polymarket’s technology stack. These apps connect directly to Polymarket markets.

The copy-trading apps compile trader rankings based on win rates and profit history. They also analyze trade timing and bet size. Users can then follow selected accounts through automated systems.

Polymarket and its rival Kalshi have both faced insider trading scrutiny. Regulators and observers have questioned market integrity on prediction platforms. Polymarket responded last month by clarifying its insider trading policies and enforcement framework.

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