Foreign intelligence agencies are reportedly using prediction markets like Polymarket and Hyperliquid to gather intelligence on US government plans, exploiting regulatory gaps. Suspicious trades, including bets placed before major announcements, have raised concerns about insider trading and national security. Analysts note the disbanding of a key US cryptocurrency enforcement unit has widened law enforcement and regulatory blind spots.
Prediction markets have become an effective medium for foreign intelligence agencies to discreetly probe US government maneuvers. Crypto bets on events like tariffs and raids have provided a window into operational security failures.
Foreign intelligence leverages platforms like Polymarket and Hyperliquid to identify unusual geopolitical bets. They then correlate winning wallets with other market activities, raising fears of insider trading and misuse of privileged information.
In one instance, just before an unexpected tariff announcement in October 2025, a single trader flipped massive Bitcoin and Ether shorts for a profit nearing nine figures. This event highlighted how specific market movements can precede confidential government actions.
Agencies exploit a void created by a lack of regulatory oversight and the anonymity of blockchain transactions. Weak coordination in law enforcement further allows the interception and exploitation of security failures.
The decision by the US Department of Justice to disband its National Cryptocurrency Enforcement teams has contributed to this gap. This move is seen as enlarging regulatory blind spots in the sector.
The situation underlines the crypto industry’s need for stronger regulatory supervision and transparency. As stated, resolving the problems of these innovative markets will be necessary as the industry evolves.
