From Battlefield to Betting Slip: Israel Files World’s First Criminal Charges for Prediction Market Insider Trading

A Polymarket account named “ricosuave666” placed seven bets on the timing of Israeli military strikes during the June 2025 Israel-Iran twelve-day war. Every single one hit. The account, linked to wallet address 0x0afc7ce56285bde1fbe3a75efaffdfc86d6530b2, netted $155,700 in profits with a perfect 100% win rate across seven months of Israel-related contracts. On February 12, 2026, Israeli prosecutors revealed how: the bets were placed by a civilian receiving classified operational intelligence from an IDF reservist who had access to real-time military planning during active combat operations.

It is the first criminal prosecution in history for insider trading on a prediction market. And it exposes a structural flaw that extends far beyond one account in one country.

How the Scheme Worked

The indictment, filed in Tel Aviv District Court on February 12, 2026, outlines a straightforward pipeline from classified military intelligence to prediction market profit. The IDF reservist accessed operational intelligence about Israeli military strikes against Iran during the June 2025 twelve-day conflict through his active military role. He shared specific timing details with a civilian co-conspirator: when strikes would commence, when operations would conclude, and when official government signals about the campaign’s end would be released.

The civilian then placed bets on Polymarket’s geopolitical outcome markets using the account “ricosuave666.” These contracts operated as binary options tied to specific military events: “Will Israel strike Iran by [date]?” and “Will operations end by [date]?” With classified foreknowledge, what the market priced as uncertain events became near-certainties for the insider.

A joint investigation by Shin Bet (Israel’s internal security service), the Israeli Defense Ministry, and the Israel Police traced the on-chain activity of wallet 0x0afc7ce56285bde1fbe3a75efaffdfc86d6530b2 back to the defendants. Additional suspects were arrested beyond the two indicted, though the exact number remains undisclosed under a court-issued gag order. For a detailed breakdown of the wallet’s on-chain activity and trading patterns, see our analysis of the ricosuave666 account.

The context matters for understanding why this was possible at all. Polymarket hosts active contracts on geopolitical events including “US strikes Iran by…?” markets that have attracted over $188 million in cumulative volume. CFTC-regulated Kalshi explicitly bans contracts involving wars, terrorism, and assassinations. Polymarket’s offshore exchange operates under no such restriction, creating a regulatory gap that insiders can exploit.

The Pattern: This Is Not an Isolated Incident

The Israel prosecution is the first criminal case, but it is far from the first suspected incident of insider trading on prediction markets. Over the past year, a pattern has emerged: accounts with suspiciously perfect timing, concentrated bets on specific outcomes, and profits that suggest access to information the market didn’t have. In a prediction market industry now processing $4 billion in weekly volume, the incentive to exploit nonpublic information has never been higher.

The escalation is unmistakable. From $13,000 on tech product launches to $155,700 on classified military intelligence to $400,000 on a U.S. military operation against a foreign head of state. The stakes are growing, the events are becoming more geopolitically significant, and only one case has resulted in criminal charges. That case came from Israel, not the United States.

The Maduro capture bet is particularly instructive. The account “Burdensome-Mix” (wallet: 0x31a5e690c621eD21De08Cb559e9524Cdb8eD9) turned approximately $32,500 into over $400,000 by betting on Maduro’s removal hours before President Trump announced the capture. Additional wallets linked to the same event include 0xa72DB1749e9AC2379D49A3c12708325ED17FeBd4 (approximately $75,000 in profit) and the account “SBet365” (approximately $145,600 in profit).

In the Nobel Peace Prize case, an account called “dirtycup” placed roughly $70,000 in bets on Maria Corina Machado approximately 11 hours before the announcement, netting around $30,000. The Nobel Institute’s director described the incident as “systematic espionage” and a possible cyber breach. In the Google Year in Search case, a trader using the account “AlphaRaccoon” achieved a 22-for-23 success rate, turning roughly $10,600 into nearly $200,000 on a single bet about the most-searched person of 2025.

Polymarket CEO Shayne Coplan’s response to these incidents has been revealing. In an Axios interview, he stated that “people going and having an edge to the market is a good thing.” On 60 Minutes, he elaborated: “What’s cool about Polymarket is that it creates this financial incentive for people to go and divulge the information to the market.” A U.S. Representative subsequently accused Polymarket executives of having “publicly downplayed, or even endorsed” the use of nonpublic information for profit.

The National Security Dimension

The Israel case elevates prediction market insider trading from a financial integrity issue to a national security concern. Stanford Law Professor and former SEC Commissioner Joseph Grundfest has warned that these bets don’t just exploit information asymmetry for profit. They actively endanger military operations.

“Such bets can put your own military at greater risk because you are signaling to your enemies what may happen, and that puts your own troops in danger.”
— Joseph Grundfest, Stanford Law Professor and former SEC Commissioner

Grundfest’s concern is not theoretical. On-chain prediction market activity is publicly visible. If someone bets heavily that Israel will strike on a specific day, that signal is readable by anyone monitoring Polymarket’s markets, including adversaries. The IDF acknowledged this risk in its statement, noting the “severe ethical failure” even while maintaining that “no operational harm was caused” in this specific case.

A January 2026 analysis published in War on the Rocks, a respected national security publication, identified what researchers called the “agency problem” in prediction market warfare. Military commanders and intelligence personnel now have a financial incentive that conflicts directly with their mission objectives. The authors warned: “Ukrainian volunteers, Russian military bloggers, and American security clearance holders alike can convert insider knowledge of military operations into profit through pseudonymous crypto wallets.”

The scale of geopolitical betting is accelerating the problem. Polymarket created 191 new geopolitical event markets in January 2026 alone, a 260% increase year-over-year. The “US strikes Iran” contract has attracted over $188 million in cumulative volume. And the house always wins: according to LayerHub data, 87% of Polymarket wallets have not recorded a profit. Retail bettors are not just competing against each other. They may be subsidizing payouts to insiders with classified information.

The Regulatory Response: Too Little, Too Slow?

The regulatory framework for prediction markets was built for an era before you could bet on military strikes with cryptocurrency from your phone. The Israel prosecution highlights how far behind regulators remain. Israeli prosecutors charged the defendants under bribery and security statutes because prediction market insider trading laws simply do not exist in any jurisdiction.

The Torres bill (Public Integrity in Financial Prediction Markets Act of 2026) represents the most direct legislative response. It would prohibit federal elected officials, political appointees, Executive Branch employees, and congressional staff from trading prediction market contracts tied to government actions when they possess or could access material nonpublic information. The bill has more than 30 Democratic co-sponsors but no Republican support, and its scope is narrow. It covers U.S. government employees but not foreign military personnel or private citizens.

The SEC signaled interest on the same day as the Israel indictment. Chair Paul Atkins told the Senate Banking Committee that prediction markets are “a huge issue,” noting that some markets could qualify as securities depending on their structure. “A security is a security regardless of how it is,” Atkins stated, suggesting the SEC already has authority to regulate certain prediction market contracts. The SEC and CFTC are now meeting weekly on the topic.

Meanwhile, the CFTC under Trump-appointed Chair Michael Selig has moved in the opposite direction, withdrawing Biden-era proposed rules and rescinding warnings to prediction market operators. Donald Trump Jr. serves as a strategic advisor to Kalshi and sits on Polymarket’s advisory board through his venture capital firm 1789 Capital. The Massachusetts ruling blocking Kalshi and the growing state-level pushback suggest the regulatory landscape remains deeply fractured.

What This Means for Prediction Market Bettors

The Israel prosecution and the broader pattern of suspicious trading carry five concrete implications for anyone participating in prediction markets.

Sources

• Two indicted for using classified info to place online bets on military operations — Times of Israel
• Israel accuses two of using military secrets to place Polymarket bets — NPR
• H.R.7004 — Public Integrity in Financial Prediction Markets Act of 2026 — Congress.gov
• Rep. Torres introduces legislation to crack down on insider trading on prediction markets — Rep. Torres Office
• Chairman Selig: America’s Financial Markets are ready for a Golden Age — CFTC.gov
• Betting on War: Prediction Markets and the Corruption of National Security — War on the Rocks
• How geopolitical bets have surged on Polymarket, in five charts — Rest of World
• ICE Announces Strategic Investment in Polymarket — Intercontinental Exchange