Picture a bettor who wins all but one of 42 wagers. Now make the game corporate earnings, and give every company the same auditor — the outside accounting firm that checks its books. A mystery Polymarket user earned about $22,000 on near-perfect bets like that, and each of those companies was audited by KPMG, according to blockchain forensics firm Bubblemaps. The firm says its analysis isn’t proof of insider trading.
Nineteen accounts, one auditor
The bets started last November and ran for several months. They were yes-or-no contracts on whether 18 KPMG clients, including Wells Fargo (WFC), Home Depot (HD) and DoorDash (DASH), would beat earnings estimates. Of 42 such bets, all but one paid off, a 98% win rate. When General Mills (GIS) missed on March 18 and its stock fell 3%, an account called greatfan1983 pocketed $654.40.
Bubblemaps counts that account among 19 connected ones, and it traced digital money bouncing between them, a pattern it reads as one person or team, perhaps hiding the trail. Their smaller bets on companies with other auditors won 82% of the time. “This is highly symptomatic of someone with an unfair information advantage,” said Bubblemaps chief executive Nicolas Vaiman.
Last month, the Journal reported that federal authorities were preparing charges against a KPMG employee over alleged insider trading on Polymarket. Whether that employee is behind these bets couldn’t be determined. KPMG says it has zero tolerance for trading on nonpublic client information and has enhanced its monitoring. Polymarket says it routinely refers matters to law enforcement and supports investigations.
An edge versus a guess
Why would the auditor matter? KPMG audits 10% of companies registered with U.S. securities regulators, and auditors review quarterly earnings, if less rigorously than annual reports. That’s the uncomfortable part of the pattern. Scrutiny of possible insider trading has grown right along with these markets’ popularity. The Journal has also reported that a U.S. servicemember suspected of making more than $1 million betting on military operations may face charges.
Here’s the difference between an edge and a guess. An edge is earned, and it’s repeatable: research, patience, low costs. A guess is a coin flip with a story. Knowing the answer before everyone else is neither, and on a yes-or-no contract, every winner needs someone on the losing side. If that someone is you, you probably won’t know who took your money.