WASHINGTON, D.C. — Congressional anger is rapidly boiling over at the prediction market platform Polymarket after anonymous traders appeared to cash in on inside information once again — this time pocketing hundreds of thousands of dollars by betting on a U.S.-Iran ceasefire in the frantic hours before President Donald Trump announced the deal on social media earlier this week. Lawmakers from both parties are now demanding answers, and Rep. Ritchie Torres, a New York Democrat, has formally called on federal regulators to launch a full-scale investigation into what he described Thursday as potential insider trading on a massive scale.

The latest controversy lands at an uncomfortable moment for Polymarket, which has grown explosively in the past two years into the world's largest cryptocurrency-based prediction market, processing billions of dollars in wagers on everything from elections and Supreme Court rulings to celebrity weddings and geopolitical crises. But what began as a quirky online betting parlor has increasingly come to resemble a shadow futures market where information asymmetries can be exploited to spectacular effect — and, critics say, without meaningful oversight.

The Iran Ceasefire Bets That Launched the Probe

According to reporting by the Associated Press and analysis of public blockchain records, at least 50 newly created Polymarket accounts placed substantial bets on a U.S.-Iran ceasefire in the hours — and in some cases the minutes — before President Trump announced the agreement on his Truth Social account late Tuesday night. The bets were specific, well-timed and enormously profitable. Some of the accounts had been opened only hours earlier and had never placed a wager before.

At the time of the trades, there was no public indication that a ceasefire was imminent. The president's own statements earlier that day had suggested escalation, not de-escalation. American and Iranian officials had exchanged threats as recently as that morning. Yet somehow, dozens of brand-new accounts appeared simultaneously on Polymarket with the apparent conviction that a deal was hours away.

"This is not a coincidence," Rep. Torres wrote in a letter addressed to Commodity Futures Trading Commission Chairman Michael Selig. Torres, who sits on the House Financial Services Committee and its digital assets subcommittee, urged the agency to obtain platform-level data, trace wallet linkages and keep Congress informed of what it finds.

A Pattern, Not an Isolated Incident

The Iran ceasefire bets are only the most recent in a growing pile of suspicious Polymarket wagers that have raised alarms. In January, an anonymous user reportedly pocketed roughly $400,000 by betting that Venezuelan strongman Nicolás Maduro would leave office, placing the wager just hours before a U.S. operation captured him. Another account made roughly $550,000 in the hours before the start of the Iran war itself by betting that the U.S. would take military action. In both cases, the timing was too precise to be easily explained by public information alone.

Harvard University researchers released a paper last month that attempted to quantify the phenomenon. Using publicly available blockchain data, the authors estimated that approximately $143 million in profits have been made on Polymarket by individuals who may have possessed non-public information about events ranging from Taylor Swift's engagement to the awarding of last year's Nobel Peace Prize. The paper did not name suspected insiders, but it painted a picture of a platform vulnerable to systematic exploitation.

Polymarket Pulls Controversial Markets

The platform has already taken defensive steps in response to the latest scandal. Last week, Polymarket abruptly removed controversial wagering markets related to an ongoing U.S. special forces rescue mission in Iran after members of Congress and military families publicly objected to the spectacle of anonymous traders betting on whether American service members would come home alive. Rep. Seth Moulton, a Massachusetts Democrat and Marine Corps veteran, called the markets "morally indefensible" at the time.

Polymarket has not formally responded to Torres' letter, but in previous statements the company has argued that its markets provide valuable signals about the probability of future events, that its terms of service prohibit market manipulation, and that it cooperates with law enforcement when illegal activity is identified. Critics counter that the anonymous, cryptocurrency-based nature of the platform makes meaningful enforcement nearly impossible.

A Regulatory Gray Zone

Part of what has made the scandals so difficult to police is Polymarket's murky legal status. The platform was originally banned from accepting U.S. customers by the CFTC in 2022 after the agency determined that it was operating an illegal derivatives exchange. But in the years since, Polymarket has aggressively expanded, and enforcement has been inconsistent at best. A wave of high-profile users, including politicians and business figures, have openly talked about their wagers on the platform despite the technical prohibition on American accounts.

The company is now lobbying to operate legally inside the United States, and its founder has become a fixture at Washington policy events. That proximity to power has made some lawmakers even more uneasy, particularly as suspicious trading patterns continue to mount.

What Happens Next

Torres' letter is the most concrete step any member of Congress has taken so far to turn outrage into action. The CFTC has not publicly commented on whether it will open an investigation, but sources familiar with the agency's thinking said Thursday that staff have been monitoring Polymarket trading patterns for months. Separate legislation introduced earlier this year by Torres would explicitly ban insider trading on prediction markets and impose new reporting requirements on platforms operating in the United States.

Whether any of it will slow Polymarket's breakneck growth remains to be seen. The platform continues to attract millions of active users, and the controversies have arguably only made it more famous. For now, lawmakers, regulators and the general public are left with an unsettling question: if strangers on the internet keep placing perfectly timed bets on decisions that are supposedly unknown to all but a handful of senior officials, who exactly is leaking — and what else are they profiting from?