Research from Columbia University suggests that the prediction market Polymarket has seen significant artificial trading activity, with wash trades accounting for up to 60% of total volume in July 2024. The study indicates that 25% of Polymarket’s trading volume over the past three years was due to artificial trading.

The practice of wash trading, where the same trader buys and sells the same asset to create false market activity, is illegal in the US. Wash trading allegations are not new in the crypto industry, with a report finding that nearly 70% of Ethereum-based decentralized exchanges engaged in wash trading.

These wash trading allegations have raised concerns about the growth of Polymarket and the broader blockchain-based prediction market sector. Despite its rise in popularity during the 2024 US election cycle, Polymarket has faced scrutiny over its trading activity and is set to re-enter the US market in November.

Polymarket has positioned itself as a leading decentralized prediction platform, allowing users to bet on real-world events without a central bookmaker. The company’s reported $10 billion valuation has attracted attention, but the recent wash trading allegations have cast a shadow over its rapid growth and popularity.

Read more at CoinTelegraph: Polymarket Trades Inflated by Wash Trading