Polymarket is under fire after refusing to settle bets linked to recent United States military action in Venezuela, a move that has angered traders and shaken trust in the platform.
The prediction market said the operation did not meet its definition of an invasion.
Traders strongly disagreed and accused the platform of redefining outcomes after the fact.
The dispute has also fueled fresh concerns about insider trading and market transparency.
Traders dispute Polymarket’s interpretation of US invasion contracts
The controversy centers on Polymarket contracts asking whether the US would invade Venezuela by January deadlines.
Traders argued that American forces entered the country, arrested President Nicolás Maduro, and transported him to New York.
On its website, Polymarket said the contract referred only to US military operations intended to establish territorial control.
The platform stated that a rapid “snatch-and-extract” mission did not meet that standard. It added that President Donald Trump’s comments about “running” Venezuela during talks did not change the outcome.
After Polymarket issued its clarification, the odds of a US invasion before January 31 fell below 5%. That shift erased potential payouts for traders who had backed the outcome.
According to the New York Post, Polymarket has handled more than $10.5 million in invasion-related bets this year.
Most of that volume focused on the January 31 deadline, with additional wagers tied to March and December expiries.
Traders reacted with anger across Polymarket’s discussion forums. One user questioned whether speed and limited casualties invalidated an invasion. Another trader, posting under the name Skinner, said Polymarket had embraced arbitrariness.
The user argued that a military incursion and the capture of a head of state met any reasonable definition of an invasion.
Insider trading concerns follow massive Venezuela-related profit
The dispute intensified after an anonymous trader recorded gains exceeding $400,000 on Venezuela-related contracts.
The account, created on December 26, placed several bets across four contracts tied to US actions in Venezuela.
On Friday, the trader invested about $30,000 predicting Maduro would be removed from power by January 31, 2026.
At the time, Polymarket priced the “yes” outcome at roughly 7%. When news broke Saturday that Maduro had been flown out of Venezuela, the position’s gains climbed above $430,000.
Polymarket’s subsequent ruling wiped out expected payouts on related invasion contracts.
The timing of the trades prompted speculation about insider knowledge. The situation echoed a prior controversy involving a successful bet on the Nobel Peace Prize.
Polymarket chief executive Shayne Coplan has previously said insider trading could benefit markets by incentivizing information disclosure. He made those remarks at an Axios Business event last year.