Stanford Study: Polymarket's Bitcoin Bets Were Rigged in the Final 10 Seconds

A small group of traders extracted $8.2 million from Polymarket’s five-minute Bitcoin contracts by pushing the spot price on Binance just before settlement, according to a new study by David Dai and Ruizhe Jia of Stanford University’s Department of Management Science and Engineering and Shihao Yu of Singapore Management University’s Lee Kong Chian School of Business.

The working paper, titled “Settlement Manipulation in Prediction Markets,” examined roughly 16,000 five-minute Bitcoin up-or-down contracts from their Feb. 12, 2026 launch through April. The contracts settle against a Chainlink oracle that aggregates spot prices from major exchanges, meaning whoever can nudge the spot price in the final moments can decide which side of the bet pays out.

The researchers found that net order flow on Binance in the final ten seconds before each close jumped roughly 50% above pre-launch levels. The bursts were concentrated and directional, arriving precisely as the betting windows expired. The behavior was rare but lucrative: only 821 traders out of roughly 243,000 (about one in 300) exhibited clear manipulation patterns. The authors wrote that manipulators “take $8.2 million in the pushed cycles while breaking even in the rest.”

The costs were not evenly shared, with 93% of the losses falling on retail participants, who effectively served as liquidity providers on the losing side of pushed settlements.

The researchers observed that the manipulation signature is “much attenuated” in Polymarket’s 15-minute Bitcoin contracts, suggesting that a longer settlement horizon makes the trade too expensive to push reliably. Their primary policy recommendation is simply to lengthen the contract horizon.

The findings land at a delicate moment for the prediction market industry, especially since crypto-native price betting has become one of its fastest-growing segments. Polymarket, the largest platform by volume, is preparing a token airdrop planned for the fourth quarter of 2026, which would put an even brighter spotlight on the integrity of its settlement design.

Neither Polymarket nor Chainlink has publicly responded to the paper’s findings, and the authors stopped short of alleging any rule-breaking by the platform itself.

Source: https://news.bitcoin.com/stanford-study-polymarket-bitcoin-manipulation/