Insider Trading Allegations Arise from Biden's Last-Minute Pardons

In the final hours of President Joe Biden's term, a Polymarket trader reportedly made approximately $300,000 by betting on a series of last-minute pardons issued by Biden. This event has raised questions about potential insider trading, as the trader placed significant bets on individuals who were ultimately pardoned, including Jim Biden, Liz Cheney, Adam Schiff, and Adam Kinzinger.

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The trader, whose identity remains unknown, placed around $64,000 in bets on the pardons, which had odds dropping to near zero on the prediction market platform. The analysis by the Paris-based analytics firm Bubblemaps revealed that the trader had previously bet on Biden's son, Hunter Biden, receiving a pardon for gun and tax charges, resulting in total profits of $316,346 from these transactions.

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Bubblemaps' investigation utilized pattern-matching artificial intelligence to trace the trades, uncovering a connection between two accounts that shared a deposit wallet on the cryptocurrency exchange Kraken. Nick Vaiman, the founder of Bubblemaps, noted the challenges in obtaining information from Kraken, which adheres to strict "know-your-customer" regulations. This complicates the identification of individuals behind crypto wallets, making it difficult for federal prosecutors to establish a clear case of insider trading.

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The rise of prediction markets like Polymarket has coincided with a growing interest in betting on political events, particularly during Trump's presidency. These markets have faced scrutiny over potential abuses, with past incidents of traders profiting from insider information. For instance, a trader made $400,000 betting on the U.S. intervention in Venezuela, while another earned $500,000 on a bet regarding Iran's leadership.

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While the Commodity Futures Trading Commission (CFTC) regulates Kalshi, the largest U.S. prediction market, Polymarket operates with fewer restrictions, particularly under the Trump administration. The Biden administration has taken a more cautious approach, limiting types of event contracts allowed on prediction markets. However, Polymarket continues to function primarily as an overseas exchange, raising concerns about the lack of regulatory oversight.

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Legal experts, including Nizan Packin from Baruch College, have expressed concerns about the implications of unregulated prediction markets. Packin argues that without clear regulations and enforcement, the potential for abuse increases, leading to significant ethical and legal questions surrounding these platforms.

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While there have been numerous allegations of insider trading linked to prediction markets, U.S. prosecutors have not announced any investigations or charges related to the Biden pardons or other suspected insider trading cases. This lack of action raises questions about the enforcement of existing laws and the effectiveness of regulatory frameworks.

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• “The odds of this happening by random chance are virtually zero,” — Joshua Mitts, Columbia Law School

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• “Without clear regulation, and clearer and stricter enforcement, the gray zone becomes larger and more questions should and will be asked,” — Nizan Packin, Baruch College Law Professor

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