Crypto prediction markets face national security fears; DEATH BETS ban pushed

Published: 2026-05-21 16:02:25 |

Bubblemaps says crypto prediction markets, focused on Polymarket, are creating national security risks. In an on-chain review, it claims there were about 80 bets linked to U.S. military actions against Iran with an unusually high 98% win rate—so consistent that “luck alone cannot explain” the outcomes. The analysis highlights timing patterns: high-conviction bets were allegedly placed in the days before major Feb. 28 events, including surprise attacks on Iran, the removal of Iran’s supreme leader, and a ceasefire announcement. Bubblemaps also points to nine connected accounts that reportedly generated around $2.4M by heavily betting on U.S. operations, while placing smaller losing bets on Feb. 20 to “avoid attention.” Bubblemaps warns this could provide adversaries with clues about U.S. war planning, and that governments could also manipulate signals. Policy response is accelerating. Rep. Mike Levin and Sen. Adam Schiff introduced the DEATH BETS Act to ban war-related prediction contracts. The report also mentions a law-enforcement case: a U.S. Green Beret (Master Sgt. Gannon Ken Van Dyke) reportedly profited about $400k from Polymarket bets tied to a Venezuela raid. Polymarket counters with claims of strict insider-trading rules, AI surveillance, and blockchain forensics, and it has been expanding oversight, including a partnership with Chainalysis.

Bearish

Regulatory and national-security scrutiny can quickly weigh on risk appetite in crypto prediction markets, and this story is directly tied to alleged insider-type advantages and possible signal manipulation. That raises the probability of tougher rules and compliance costs for Polymarket-style war-event contracts. In the short term, traders may de-risk event-driven positions due to headline-driven volatility and uncertainty over contract availability. In the long term, if DEATH BETS Act-like restrictions or enforcement actions expand, liquidity could decline for sensitive categories, pressuring volumes and sentiment around the platform’s token (POLY).