Unusual Whales’ tool, Unusual Predictions, seeks to identify traders with privileged information using metrics such as profitability, trading history and the timing of their wagers.
At a time when people are using prediction markets to bet on whether the US will take control of Greenland, the race to identify potential insider trading on the platforms is intensifying.
Unusual Whales, a financial data provider best known for its annual report on congressional stock trading, has launched a tool that scours the prediction platform Polymarket for unusual activity and suspected insider bets.
“We thought prediction markets were almost a required expansion for us because the next big insider trade might not be in Congress, it might not be in the stock market, it may be in prediction markets,” Matt Saincome, who joined the company last year as CEO, said in an interview.
Well-timed and hugely profitable bets placed just before this month’s ouster of Venezuela’s Nicolás Maduro have sparked an uproar over potential insider trading on prediction platforms, inspired new legislation and kicked off a contest to identify traders with confidential information.
Some fans of prediction markets have argued that they are valuable precisely because they offer an incentive for people with privileged information to put their money on the line and improve the market signals available to the public. Others see betting on politics and sports by insiders as inherently unfair.
Unusual Whales is not the only company trying to spot traders with confidential info. Insider Finder, a rival tool, also hunts for large anomalous transactions on Polymarket. Its creator, Tre Upshaw, said earlier this month that a $2 million funding round for the business is in the final stages.
San Francisco-based Unusual Whales caused a stir in 2021 with a report on congressional trading that put the spotlight on how lawmakers might use privileged information. Its data forms the basis for the Unusual Whales Subversive Democratic Trading exchange-traded fund, which has outperformed the S&P 500 by roughly 10% since inception.
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For Saincome, there’s a connection between Unusual Whales’ work analyzing lawmakers’ stock trades and its attempts to sniff out insiders on prediction markets. The tool his company developed, Unusual Predictions, seeks to identify traders with privileged information using metrics such as profitability, trading history and the timing of their wagers. Clients can then put that intelligence to work on prediction or stock markets.
“We’ve been tracking potential insider trades and suspicious politician trades for years and years,” said Saincome.
Unusual Prediction tracks trades on Polymarket, which offers a window into prediction market trading by logging transactions on a public ledger using blockchain technology. Most prediction markets do not offer trading records on specific accounts. A spokesperson for Polymarket said the company “generally welcomes” projects that want to build on its platform.
The agency that oversees these exchanges in the US, the Commodity Futures Trading Commission, has maintained a light touch and said little about how it views insider trading. Few expect a crackdown given the Trump administration’s hands off approach to financial regulation.
Polymarket’s main exchange operates internationally and is technically closed to US residents. It does not conduct identity checks.
Representative Ritchie Torres, a New York Democrat, has attracted co-sponsors for legislation barring federal officials from trading contracts tied to policy outcomes if they hold — or could reasonably obtain — material non-public information through their official duties.
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