How a Crypto Whale Just Rigged a $7M Polymarket Bet?

Polymarket, a leading decentralized prediction market, has come under fire after users reported what they call the “wildest” governance attack in recent history. A major UMA token holder allegedly manipulated the platform’s oracle system, forcing a market to settle based on an outcome that never actually occurred, according to a recent report from Wu Blockchain.

The incident revolved around a high-stakes bet titled “Ukraine agrees to Trump mineral deal before April?” Despite no official confirmation of such an agreement, the market settled on “YES”, allowing certain traders to cash out substantial profits while leaving others with heavy losses.

How the Alleged Manipulation Unfolded

Polymarket relies on UMA’s Optimistic Oracle to verify and resolve bets. This system is designed to be an impartial arbiter, with UMA token holders responsible for voting on final outcomes. 

However, recent events suggest that those with significant voting power may have the ability to sway results in their favor.

Here’s what happened:

• An insider whale reportedly spent 5 million UMA tokens to vote in favor of a “YES” outcome.
• This whale controlled 25% of the votes, enough to overturn the majority decision.
• The total funds staked in the market exceeded $7 million, meaning the financial impact was significant.
• When the final results were issued, traders contested the decision, arguing that no formal agreement had been signed between Trump and Ukraine.

Despite these objections, the market settled in favor of the whale’s vote, allowing them to secure profits while traders who bet “NO” faced massive losses.

Was There a Trump-Ukraine Deal?

According to Reuters, Trump did state on March 25 that he expected a revenue-sharing agreement between the U.S. and Ukraine to be signed “soon.” However, there was no official confirmation from either government that an agreement was finalized.

Many traders argue that an expectation of a deal is not the same as an actual agreement. One frustrated user on Polymarket wrote:

“This is a big joke. Zelensky just announced they are looking into a bigger deal, which means there was no deal before. Wow, real scam.”

Another trader expressed concerns about the implications of this event:

“In the 2028 U.S. presidential election, whoever owns more UMA will decide who wins. Polymarket will become a joke.”

While some see this as a clear case of governance manipulation, others believe it was a mix of negligence and flawed decision-making by both Polymarket and UMA.

An X (Twitter) user pointed out that the confusion started when Polymarket issued a last-minute clarification, stating that the market wasn’t ready for resolution. However, the UMA voting process was already underway, and whale voters revealed their “YES” votes to avoid penalties.

Because UMA token holders have an incentive to vote in ways that maximize their profits, they sided with the whale’s decision rather than waiting for clearer evidence. As a result, the market was resolved based on strategic voting rather than real-world events.

Polymarket’s Response to the Controversy

Following the backlash, a Polymarket representative addressed the issue on Discord, acknowledging that the outcome was unexpected but insisting that it did not constitute a market failure.

“We are aware of the situation regarding the Ukrainian Rare Earth Market. This market resolved against the expectations of our users and our clarification. Unfortunately, because this wasn’t a market failure, we are not able to issue refunds.”

Polymarket further stated that they are working with UMA’s oracle team to prevent similar incidents in the future. However, the response has done little to ease concerns, as many users feel the system still allows for outcome manipulation.

The Bigger Picture: Can Oracles Be Trusted?

The entire premise of decentralized betting markets relies on transparent, verifiable real-world outcomes. But when a governance mechanism allows those with more tokens to dictate reality, the system’s fairness comes into question.

As a result of this controversy, Polymarket now faces:

• A loss of credibility among traders.
• Increased scrutiny from the broader DeFi community.
• Calls for governance reforms to prevent similar attacks.