More than 150 cryptocurrency wallets betting on military events through Polymarket behaved in ways researchers associate with possible insider trading. Now a separate federal prosecution involving a U.S. Army master sergeant is giving those concerns a real-world legal test.
The Anti-Corruption Data Collective, or ACDC, identified 152 wallets making unusually successful longshot bets in military and defence markets. Together, the wallets won about $8 million.
Its August report, Classifying Insider Trading Risk: Analyzing the Longshot Betting Ecosystem on Polymarket, examined 78,496 longshot bets from 12,355 wallets on markets settled through May 5, 2026.
The research does not show that those 152 wallets belonged to military personnel, government officials or anyone else holding classified information. Instead, ACDC created a statistical profile for accounts whose behaviour resembles previously reported cases of suspected insider trading.
Researchers call those accounts “Orcas.” They tend to focus on relatively few subjects, win unusually often when betting on outcomes the market considers unlikely and sometimes appear shortly before the event being predicted.
ACDC put wallets with longshot success rates above 75%, concentrated activity and limited market breadth among its most suspicious accounts.
Suspicious military bets appeared on Polymarket before larger traders moved in
Of 1,432 wallets making longshot military bets, researchers classified 152 as Orcas. Another 482 were high-volume “Whales,” while 166 appeared to be automated Bots.
The Orcas put roughly $2 million into military longshots and made an average profit of about $52,514 per wallet. ACDC cautioned that proving whether any individual trader actually possessed inside information would require investigative powers beyond the study.
What happened after those bets appeared may be just as important. Around major military events, winning Orca wagers generally arrived before Whales and Bots moved into the same markets.
“In both cases, longshot bets by Orcas preceded longshot bets by Whales and Bots,” the researchers found in their analysis of military-market activity.
It raises the possibility that sophisticated traders were watching public blockchain transactions, spotting unusual bets and following them with larger positions. One informed wager could therefore become a signal that other market participants quickly amplify.
“If financial speculators can quickly observe insider bets and act on them in real time, then so can militaries and intelligence agencies around the world,” the report says.
ACDC examined activity surrounding Iran-related strikes in June 2025 and February 2026. During the June episode, an Orca made the first correct longshot wager more than a week before the strikes. Another bet about 13 hours before the attack was followed roughly 20 minutes later by a much larger Bot wager.
In February, Orcas again appeared before Whales and Bots. Researchers saw a “flurry” of Orca activity around February 16, followed by increased Whale positions and more automated betting as the strikes approached.
The pattern is consistent with other traders reacting to wallets they believed had better information, although it does not prove that explanation.
Across the full dataset, ACDC classified 556 of the 12,355 longshot wallets as Orcas. The markets represented around $15.6 billion in betting volume and $197 million in net profits.
Orcas averaged returns of 132% across all markets. Among those active in military markets, the report put average returns at about 167%, compared with roughly 1% for Whales and Bots and losses for ordinary traders labelled “Small Fish.”
US soldier allegedly made $400,000 betting on classified operation
The statistical warnings now sit alongside a separate criminal case in Manhattan involving Army Master Sgt. Gannon Ken Van Dyke, 38, who served with U.S. Army Special Operations Command at Fort Bragg, North Carolina.
Federal prosecutors allege Van Dyke used classified and other nonpublic information he obtained through his work on Operation Absolute Resolve to make Polymarket bets involving U.S. military action in Venezuela and Nicolas Maduro’s removal from power.
“The core theory of the Indictment is that Van Dyke took information that he had pledged to keep confidential and, though he was duty-bound not to do so, he used it to make a personal profit,” prosecutors said.
According to prosecutors, Van Dyke opened his Polymarket account on December 26, 2025. Between December 27 and January 2, he allegedly spent about $33,934 buying “YES” shares connected to Venezuela and Maduro while working on the operation.
One position involved roughly 13,769 shares predicting Maduro would be out of power by January 31, 2026. Van Dyke allegedly paid about nine cents a share, a market price implying roughly a 9% probability.
U.S. special forces captured Maduro and his wife in Caracas before dawn on January 3. Once the operation became public, several contracts settled at $1 per “YES” share. Prosecutors allege Van Dyke made more than $400,000 in net profit.
A federal grand jury indicted him in April on five counts involving confidential government information, commodities and swap fraud, wire fraud and an unlawful monetary transaction. Van Dyke pleaded not guilty and was released on $250,000 bail subject to travel restrictions.
The Justice Department has described it as its first criminal insider-trading prosecution involving prediction markets. The Commodity Futures Trading Commission also filed a parallel civil case in April.
Van Dyke asked the court on July 31 to dismiss the criminal indictment. Among his arguments, he contended that the event contracts were not swaps under the Commodity Exchange Act and that classified military information could not constitute property for wire-fraud purposes.
Prosecutors pushed back in an August 19 filing in the Southern District of New York, arguing that all five counts should proceed and that Van Dyke’s arguments should be decided at trial.
They say the statutory definition of swaps can cover event contracts with financial, economic or commercial consequences. They also cite Van Dyke’s nondisclosure obligations, including an agreement concerning “Western Hemisphere Operations” in which he acknowledged information obtained through his work “is now and will remain the property of the United States Government.”
Van Dyke “committed an old crime on a new platform,” they said.
“Because the Indictment alleges all that it must,” prosecutors said, “the next step is trial.”
Public Polymarket trades could expose military secrets
The Van Dyke allegations remain unproven, and the ACDC analysis separately stops well short of claiming that its 152 military-market Orcas possessed classified information. Together, though, the cases illustrate two sides of the same problem: identifying who may have traded on secret information and understanding what their public trades reveal to everybody else.
Blockchain transparency helped ACDC follow funds through cryptocurrency exchanges, bridges, decentralised exchanges and other services. But public addresses do not necessarily disclose their owners, and trails can end at institutions handling assets for thousands of customers.
That makes suspicious behavior easier to spot than the person responsible for it.
The larger security concern can emerge before investigators ever identify a trader. Prediction markets covering wars, military operations and government decisions give people with confidential knowledge a financial incentive to act. Their wagers can then be monitored by algorithms, wealthy investors and potentially foreign intelligence services.
ACDC recommends stronger bettor identification, conditional payouts for suspicious high-risk bets and restrictions on particularly vulnerable market categories. It ultimately argues that some markets present risks those measures cannot eliminate.
“Only outright bans on the highest-risk market segments can adequately address the risks and the structural imbalance they sustain,” the report concludes.
Whether any of ACDC’s 152 military-market wallets were controlled by people holding classified information remains unanswered. The Van Dyke prosecution could meanwhile test how existing fraud and commodities laws apply when prosecutors allege that government secrets were converted into prediction-market profits.
The underlying vulnerability is broader than either case. Once secret knowledge becomes a publicly visible wager, other traders can see it, copy it and magnify it long before investigators determine who placed the original bet.
Featured image: AI-generated image via Canva / Polymarket
The post Polymarket military bets expose security risks as soldier case reaches court appeared first on ReadWrite.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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