Blockchain analysts say traders may have used insider information to profit on Iran conflict bets
A single digital gambler known only as "Magamyman" walked away with $600,000 this weekend after successfully betting on the U.S. military’s strike against Iranian leadership—and he was not alone.
As millions of dollars flooded into controversial prediction markets tied to U.S. strikes on Iran and the death of Ayatollah Ali Khamenei, blockchain investigators say a handful of suspected insiders may have used non-public information to turn the fog of war into a personal windfall.
Just before the U.S.-led strikes that rocked Iran early Saturday, Reuters and other outlets reported a surge of "suspiciously timed bets" that generated significant profits. Blockchain analytics firm Bubblemaps identified six suspected insiders in a post on X, saying they collectively netted $1.2 million on Polymarket just hours before the conflict began.
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Total trade volume on the fate of Khamenei reached more than $55 million on Kalshi and more than $58 million on Polymarket.
Kalshi faced intensified scrutiny after the federally regulated exchange voided some trades made on the position, "Ali Khamenei out as Supreme Leader?" as fine print indicates that individuals cannot profit directly from death. Instead of settling the "Yes" contracts at the full $1 value, Kalshi invoked a "death carveout" rule, settling positions based on the last traded price before his death was officially confirmed and refunding all trading fees.
"As an exchange, we resolve the market according to the rules, even when there is disagreement with the resolution. I understand many of you are frustrated about the Khamenei market," Kalshi co-founder Tarek Mansour posted on X.
"No trader lost money on this market. While the rules were clear and we tried our best to highlight them, traders vocalized they were not prominent enough," Mansour continued. "We learned a lot from this market. We are updating how we present similar markets (e.g., those with a death carveout or where a death might be a likely scenario) so traders can see the exception more clearly before they trade."
Neither Polymarket nor Kalshi immediately responded to Fox News Digital’s request for comment.
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"Gambling on war and death doesn’t just present national security risks, it also raises serious concerns about potential insider trading—presenting unscrupulous government officials with a chance to profit off the new war in Iran," Senate Minority Leader Adam Schiff, D-Calif., posted to X on Monday. "These contracts are immoral. [Commodity Futures Trading Commission] can and must ban them."
However, this is not the first time prediction markets have faced scrutiny for alleged insider trading. Just last month, Kalshi took action by suspending and fining two users — including an employee of the world’s most-subscribed YouTuber, MrBeast — for trading on material, nonpublic information.