A new study said that Polymarket five minutes Bitcoin contract became a machine to transfer wealth. It shifted money from traders to a small group of fraudsters, and caused Bitcoin’s price to plummet during this period.
The paper“Settlement Manipulation in Prediction Markets” by David Dai, Ruizhe Jia, and Shihao Yu of Stanford and Singapore Management University, studied something that did not exist before February 12, 2026.
On that day Polymarket launched a binary contract that paid $1 if Bitcoin closed a five-minute window above the one it opened, and $0 otherwise. A new deal is opened every five minutes day and night.
In a few months, Polymarket of five and fifteen minutes crypto the up/down markets sold more than $4 billion and tripled the number of platforms every day. The error in the polymarket was when the contract was settled against the Chainlink oracle that had the price of Bitcoin for the main trade.
A trader who had a contract can buy or sell real Bitcoin In the closing seconds, drag the index value past the default, and win the bet.
The integration of the oracle exchange was seen as a security measure, because the move required moving many places at the same time. The authors showed that it was not much protection. Binance, the world’s largest crypto exchange, stayed close to two and a half points from oracle and moved closer to one point. It completed the same part of the decision as the decision 85% of the time. The push that drove the price of Binance a few points past the hit carried the results.
The example was in Binance data. After the five-minute contract expired, the total bid in the last ten seconds of each close jumped nearly 50% above the opening level. The rise was very sharp when the kick was important: in 6% of the games that the market judged close-even, the jump was about 3.9 times.
The change stopped. Most of the real information remains on the price; false kicks do not. Within ten seconds the tree was back, about a quarter in a row. The push increased in the few hours, when the moving dollar moved the price the most: 56% landed overnight and 44% over the weekend.
Who won, who paid with these Polymarket bets
In average races, pushing for the favored side resulted in the winner 65% of the time, versus 41% in the normal trade. Even when one side had a 90 to 100% chance before it closed, pushing back changed the outcome 34% of the time, versus 1% around without pushing. Bets that the market saw as almost-others lost one out of three times.
Because Polimamarket based on the public blockchain, the authors tracked each wallet. Only 821 sellers have a fraudulent record, about one in three hundred out of 243,000 who sold the contract. He took home $8.2 million in push races and crushed the rest. Of the losses, 93% fell on trading.
The authors rejected the masking as an innocent explanation. The business deal showed little hedging on one side as soon as it was confirmed, but these were cycles where the push was skipped. And the ad came in one burst in the last fifty seconds, not as a built-in screen.
Medicine
The arrangement was up to the contractor. Control was absent on the fifteen-minute contract, as the long window took ordinary trades before the close and made the sustained push into a weak force. What happened to crypto: Nasdaq and Cboe each filed with the SEC to list binary price contracts on equity indexes, which would have the same risk on capital markets.
