Israeli Military Betting Scandal: Classified Intel Used on Polymarket

The indictments follow a joint investigation by Israel’s Defense Ministry, the Shin Bet domestic security agency, and the Israel Police, which led to the arrest of several suspects, including additional reservists beyond the two formally charged. Prosecutors have filed charges against one reservist and one civilian for what authorities described as severe security offenses, alongside bribery and obstruction of justice. In a stark warning, the defense establishment stated that placing bets based on classified information “creates a real and serious threat to IDF operations and to state security,” vowing to act decisively against anyone involved.

The case emerged from suspicions examined by the Shin Bet a month prior, focusing on the potential misuse of secret material within the defense establishment. Investigators allege that reservists leveraged sensitive information accessed through their military duties to wager on future military developments. The court’s gag order prevents the release of operational specifics and the full list of individuals questioned, underscoring the sensitivity of the ongoing probe into what appears to be a direct pipeline from military intelligence to a speculative crypto market.

The scandal draws specific attention to a Polymarket account operating under the name “ricosuave666.” According to reports, this user placed several highly accurate bets in June 2025 related to Israeli military operations in Iran. The account reportedly wagered tens of thousands of dollars and secured an estimated profit of around $150,000 from these prescient trades. This pattern of success, allegedly predicated on non-public operational knowledge, exemplifies the core manipulation concern at the heart of the case: the use of insider information to gain an unfair and illegal advantage in prediction markets.

This incident is not an isolated concern regarding Polymarket’s integrity. A recent study by researchers at Columbia University analyzed transaction patterns on the platform indicative of wash trading—a form of market manipulation where a trader buys and sells the same asset to create misleading activity. The research found such activity began rising in July 2024, peaked at nearly 60% of reported volume in December 2024, persisted through late April 2025, and climbed again to about 20% of volume in early October 2025. These findings suggest systemic challenges to market fairness that extend beyond the current security breach.

Polymarket’s rapid growth has attracted a diverse user base, from casual traders to high-profile crypto figures, even as it faces increased scrutiny. Among its notable participants is Ethereum co-founder Vitalik Buterin, who recently disclosed earning about $70,000 last year on the platform by betting against outcomes he deemed “highly irrational.” The platform has also hosted more whimsical, viral markets, such as comparisons showing that the odds of confirming alien life in 2025 were once higher than Bitcoin reaching $200,000.

However, the Israeli scandal and the academic research on wash trading highlight the dual pressures facing prediction markets. They must balance innovative, speculative trading with robust mechanisms to prevent both traditional financial crimes like insider trading and crypto-native manipulation schemes. The platform’s association with a national security incident involving the IDF and Shin Bet represents a new frontier of risk, moving concerns from market integrity into the realm of geopolitics and state security. This case may prompt regulators and platform operators globally to re-evaluate safeguards against the misuse of privileged information in decentralized prediction ecosystems.