2026-05-04 12:45:44
Beware of wallet draining products on Polymarket, prediction markets, analysts warn
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Recently on the social media platform X, blockchain investigator ZachXBT flagged a fraudulent prediction market product, PolyArb, warning that the site contains a wallet drainer designed to steal funds from users who connect their wallets. Tech investor William LeGate’s interaction with the fraudulent product’s account on Twitter prompted ZachXBT’s warning, as LeGate was giving it visibility to a wider audience of potential victims. Why are scammers targeting prediction markets? Blockchain investigator ZachXBT recently flagged a fraudulent prediction market product called PolyArb, warning that the site contains a wallet drainer designed to steal funds from users who connect their wallets. Prediction markets have been a popular target for scammers, and that interest has only grown since open interest hit a record high of $1.3 billion in April 2026. There has also been growing public interest in the sector. Kalshi led the market with $636.4 million in open interest, followed by Polymarket at $589.8 million. Kalshi also posted $13.4 billion in spot volume for the month, up 12.6% from March. Kalshi and Polymarket remain the hottest prediction market venues. Source: Defillama ZachXBT posted the warning on X after noticing that tech investor William LeGate had interacted with the PolyArb account, explaining that it is a fake prediction market product with a wallet drainer on the site. He also stated that LeGate’s interaction with them “gives them reach for new potential victims.” Security researcher bbsz, who tracks on-chain threat actors, explained that the operation behind PolyArb is a cluster operated by an individual who runs both drainers and occasional malware campaigns across different front ends. It's a whole cluster operated by someone running both drainers and occasional malware campaigns (on different front ends). Its not your classic hit-and-run drainer op, more like a long game build with a resemblance of credibility. Many such cases. @williamlegate – its best if you… — bbsz (@blackbigswan) May 4, 2026 The researcher described it as a long-running effort built to appear credible. Is it safe to trade on prediction markets right now? Cryptopolitan has previously reported on how the prediction market boom is drawing users looking for automated shortcuts to trading, like arbitrage bots and AI-driven trading strategies. This interest creates fertile ground for fraudulent products that mimic legitimate tools. A product like PolyArb, which positions itself as an arbitrage tool for prediction markets, targets exactly the audience most eager to find. Despite that, legitimate prediction market platforms like Polymarket and Kalshi remain functional and are attracting serious institutional backing. New legitimate platforms are entering the space as well. For instance, Hyperliquid launched its HIP-4 prediction market feature in early May, processing 6.05 million contracts on its first day and capturing 0.7% of the prediction market. Cryptopolitan reported that Hyperliquid set a record for new users on May 3, with 2,441 new original wallets. Polymarket raised $600 million, backed by Intercontinental Exchange (NYSE: ICE), the company that owns the New York Stock Exchange. Kalshi’s valuation recently rose to $22 billion. Notably, 67% of all Polymarket profits flow to just 0.1% of accounts, and fewer than 2,000 users capture nearly $500 million per account. Bloomberg’s review of wallets active since early 2025 found that over 100,000 accounts had lost at least $1,000. If you're reading this, you’re already ahead. Stay there with our newsletter .