Recent findings from blockchain investigator ZachXBT have raised significant questions about potential insider trading within the cryptocurrency sector. The investigation, which identified Axiom, a crypto trading platform, as a company allegedly involved in using non-public information for profitable trades, has led to scrutiny of betting activities on Polymarket, an online prediction market.
Prior to the public release of ZachXBT’s findings, at least 12 wallets were identified as having made substantial bets on Axiom, collectively earning over $1 million. One trader, known as predictorxyz, notably transformed an investment of $0.14 per share into a profit of $411,000, marking a remarkable return on investment.
Polymarket created a contract that allowed users to wager on which company would be implicated in insider trading, generating approximately $40 million in volume since the start of the week. This contract drew attention as the odds shifted dramatically in favor of Axiom just before the investigation’s results were disclosed.
Lookonchain reported that a small number of wallets dominated the betting activity on Axiom, raising suspicions about prior knowledge of the investigation. A separate analysis by Polysights highlighted five wallets that collectively wagered around $50,000, resulting in profits of $266,000. Such concentrated betting activity suggests that these individuals may have had access to information not available to the general public.
Throughout the week leading up to the announcement, another platform, Meteora, had been the frontrunner in betting odds, with Axiom’s odds peaking at 46.2% shortly before the findings were made public. This shift in betting patterns indicates that some traders may have anticipated the outcome, either through informed speculation or prior knowledge.
ZachXBT mentioned that he had reached out to Axiom for comments and conducted interviews before publishing his findings, which he acknowledged could lead to leaks. This raises the possibility that individuals within Axiom may have been aware of the impending report, allowing them to place bets or inform others to do so.
Axiom expressed its shock and disappointment regarding the investigation’s conclusions and stated that it would continue to investigate the matter internally. However, the company did not address whether it was aware of any employees engaging in betting activities on Polymarket.
The situation underscores a critical irony: the market mechanisms intended to provide transparency and accountability instead appear to have benefited those implicated in the investigation. As the cryptocurrency landscape continues to evolve, the implications of this incident may prompt further examination of regulatory frameworks surrounding insider trading and market manipulation.
ZachXBT's investigation into Axiom has unveiled potential insider trading linked to significant betting on Polymarket. The findings raise concerns about market manipulation and the integrity of trading practices in the cryptocurrency sector.