Suspicious trading activities in prediction markets have surged, with approximately $200 million in flagged transactions from January to June 2026, according to Bloomberg Businessweek. The analysis of 34,000 suspicious trades by Polysights highlights that geopolitical and war-related bets, particularly those involving Iran, were significant drivers. Notably, 71% of these flagged trades were funded through U.S.-regulated crypto exchanges. The concentration of profits is striking, with the top 1% of profitable wallets capturing over half of the gains, and 57% of these wallets were created within 24 hours before trading. Investigations have been launched into several cases, including a U.S. soldier accused of using military secrets to earn over $400,000 on Polymarket, and an Israeli reservist charged with using classified intelligence for betting on Iranian events. Despite Polymarket's ban on U.S. users, VPNs allow circumvention. Goldman Sachs has prohibited employees from trading in prediction markets, and the U.S. Senate has banned members and staff from participating.