Textbook level! $6,000 leverages a market cap of $200 million, and this "prophecy" platform is becoming a perfect hunting ground for insider trading.

On the evening of February 23, on social media, on-chain detective ZachXBT posted a teaser claiming he would reveal an insider trading scandal involving the most profitable company in the crypto space on the 26th. The tweet received over 8.5 million views, and in the context of a bear market, the phrase “most profitable” sharply struck a nerve in the market.

Prediction platform Polymarket quickly caught this traffic and launched a prediction market titled “Which company will ZachXBT expose?” Its popularity briefly ranked second only to predictions about the US-Iran conflict. Initial speculation focused on World Liberty Financial, due to its co-founder’s connections to US politics, sparking imagination. But then, attention shifted to Meteora.

The turning point came on February 24. A newly created address invested about $6,000 into Polymarket, betting that Meteora was the target, instantly boosting the market probability by 5%. About an hour later, another address shorted Meteora tokens $MET on Hyperliquid with 3x leverage, with a position worth over $33,000.

The timing was highly coincident, leading many to believe this was a “pump-and-dump” scheme using prediction market information for manipulation. Some pointed out that the cleverness of ZachXBT’s investigation lies in the fact that the investigated company, knowing it was at fault, might actually be engaging in insider trading on the prediction market. Some users lamented that less than $6,000 could influence a project with a fully diluted valuation close to $200 million, greatly lowering the barrier to market manipulation on Polymarket.

However, upon verification, the claim that these two addresses belong to the same person lacks on-chain evidence; the inference based solely on similar timing is tenuous. Additionally, the address shorting $MET eventually closed at a loss, and the newly created address on Polymarket later placed small bets on other companies. Therefore, these two transactions are more likely just coincidences. If it were truly the same person, such unprofessional operations could only be seen as a test—because after an hour of betting, the $MET price rose instead of falling, which is not ideal for shorting.

Meteora co-founder Zen also clarified that since the team took over in March last year, they have placed great importance on insider trading risks and have implemented preventive measures. He emphasized that the platform’s permissionless nature means the team usually only learns about projects after they go live.

Although this incident is most likely a market overreaction or a false alarm, it clearly outlines a template for market manipulation using Polymarket. For example, if there were a prediction on “When will the Fed raise interest rates,” manipulators wouldn’t need insider info—just large bets on a certain option could trigger panic or optimism, influencing assets like $BTC. Given Polymarket’s limited order book liquidity, a few tens of thousands of dollars in bets could leverage dozens or hundreds of times in the contract market.

The original purpose of prediction markets is for informed individuals to profit from betting on the truth. Previously, bets on the US invading Venezuela appeared, with public opinion more surprised that insiders personally placed the bets rather than condemning insider trading. But the widespread criticism triggered by this event, on the surface, targets insider trading; deeper down, it raises concerns that Polymarket could become a low-cost tool for sentiment manipulation.

In other words, if this manipulation succeeded and the $MET price was truly affected, the manipulator effectively moved a $200 million market cap with just $6,000. Even more frightening is that the process has almost no barriers—just a crypto wallet and basic operational knowledge.

Even if this event is not factual, it rings an alarm again: a platform intended to replace traditional news and reveal the truth is evolving into a fertile ground for insider trading and market manipulation. In the past, insider trading at least revealed some facts in advance; now, pure capital influence can stir chaos in an unregulated environment, demonstrating a more brazen new form driven by profit motives.

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