Polymarket faces scrutiny as fee pilot follows MNPI claims

• Lyla Velez
• February 19, 2026
• News
• 0 Comments

Key Points:

• $500k month from new account raises market integrity and fairness concerns.
• Alleged pattern: MNPI-driven, well-timed concentrated bets before information becomes public.
• New market-order fee could shift market-making, latency tactics, and execution quality.

As reported by AOL, a Polymarket account opened roughly a month ago has realized more than $500,000 in gains trading crypto up/down markets. Such outsized, rapid profits are unusual and immediately raise questions about information advantages and market integrity.

Large, fast wins do not alone establish wrongdoing. But the pattern often associated with Polymarket insider trading allegations is the use of material nonpublic information (MNPI) to place well-timed, concentrated bets before news becomes public.

According to PANewsLab, Polymarket on February 18, 2026 began piloting a market order fee in its sports marketplace. Fee and matching design can influence market-making, latency strategies, and user execution quality, which may in turn shape who profits and how reliably prices reflect new information.

Insider trading on prediction markets: what U.S. law covers

ETHNews notes that the STOCK Act bars federal officials from using non-public information to trade securities, yet prediction markets can fall outside traditional securities definitions. That gap complicates prediction market regulation and leaves unclear how MNPI restrictions apply to contracts on policy or geopolitical outcomes.

As reported by The Guardian, the Commodity Futures Trading Commission (CFTC) oversees many derivatives, but legal application to offshore prediction platforms, or those accessed via VPN, remains unsettled. The ambiguity makes enforcement uneven and encourages policy debate on jurisdiction and user eligibility.

Fortune reports that Rep. Ritchie Torres has advanced the Public Integrity in Financial Prediction Markets Act of 2026, aiming to prevent government officials with privileged access to MNPI from trading related contracts. The proposal targets conflicts where public duties intersect with financial incentives on event outcomes.

Industry-run venues have tried to align with familiar financial-market safeguards. “Kalshi already bans insider trading,” said Tarek Mansour, CEO of Kalshi, as reported by Business Insider, framing MNPI-based trading as a financial crime under exchange-style rules adapted to event contracts.

Ethics and effectiveness: do insiders help or harm?

KuCoin coverage highlights industry concern that allowing MNPI-based trades is unethical and harms counterparties, even when it goes unpunished. The view emphasizes user protection and the risk that normalizing MNPI erodes confidence in fair pricing.

By contrast, Forbes reports that economist Robin Hanson sees well-informed participation as integral to prediction accuracy. “Insider trading” can be “a feature, not merely a flaw,” said Robin Hanson, arguing that rewarding superior information is the mechanism by which markets aggregate knowledge.

A qualitative audit on arXiv argues that platform design can mask capital concentration and asymmetric access to information, which risks producing signals that obscure uncertainty. The critique warns that perceived advantages for whales or privileged actors can drive away retail users and degrade forecasting quality.

The emerging consensus is that clarity matters: precise definitions of MNPI, consistent surveillance standards, and transparent fee structures can support trust while preserving information discovery. Until rulemaking or legislation resolves scope and eligibility, platforms will need design choices and disclosures aligned with both market integrity and user protection.