Lead: Israeli prosecutors in Tel Aviv announced on Thursday that two people — a civilian and a military reservist — have been indicted on suspicion of using classified military information to place wagers on the crypto-based prediction market Polymarket. The charges, which include bribery and obstruction of justice, follow multiple arrests connected to alleged Polymarket bets informed by secret intelligence. Officials did not disclose the identities of the accused or the exact trades under scrutiny. The announcement follows media reports that investigators were probing wagers tied to a June 2025 Israeli strike linked to a 12-day conflict with Iran.
Key takeaways
- Two individuals — a civilian and a military reservist — were publicly indicted by Tel Aviv prosecutors on charges of bribery and obstruction of justice related to alleged use of classified information to place Polymarket bets.
- Israeli authorities say several other people were arrested in the same probe; prosecutors have not named those arrested nor identified the specific Polymarket markets under investigation.
- Israeli media reported investigators examined Polymarket wagers tied to an Israeli strike on Iran in June 2025, during a 12-day war between the countries.
- Polymarket operates an overseas crypto-based market; unlike Kalshi, it is not regulated by the U.S. CFTC and has become a venue for contentious event wagers.
- A January trade on Polymarket turned $32,000 into $400,000 by correctly predicting the toppling of Venezuela’s Nicolás Maduro; that bet prompted debate but remains unresolved as to whether classified information was used.
- Experts, including former SEC commissioner Joseph Grundfest, warn that bets based on military secrets could endanger forces and encourage insider trading across militaries worldwide.
Background
Prediction markets let users wager on the outcome of future events and have expanded in scale and scope in recent years. Polymarket, which facilitates many trades in cryptocurrency on an overseas exchange, has attracted markets considered controversial or off-limits under U.S. regulation, such as wagers tied to armed conflict and international crises. Kalshi is a U.S.-regulated alternative overseen by the Commodity Futures Trading Commission (CFTC) and excludes markets involving war, terrorism and assassinations.
Tensions over regulation and enforcement have been heightened by several high-profile trades. In January, a single Polymarket wager reportedly turned $32,000 into $400,000 after correctly predicting the removal of Venezuelan leader Nicolás Maduro shortly before public disclosure of the operation. That result triggered scrutiny over whether bettors used privileged or classified information; U.S. authorities have not publicly concluded whether that trade involved illegal insider use of intelligence.
The Israeli announcement ties into this broader controversy by alleging that classified military information — in one reported instance tied to combat in June 2025 — was used to inform bets. The issue raises questions for armed forces worldwide about personnel access to secrets and the potential for financial incentives to compromise operational security.
Main event
On the date of the prosecutor statement in Tel Aviv, officials said two people were indicted and an unspecified number of others detained on suspicion of placing wagers informed by classified material. Prosecutors framed the charges around bribery and obstruction of justice; they did not release names, specific markets, or amounts wagered. The limited public details mean the precise mechanics alleged by investigators — who provided the public statement — remain under seal as the legal process moves forward.
Israeli media outlets earlier reported that investigators were scrutinizing Polymarket wagers linked to an Israeli strike on Iran in June 2025, during a 12-day military exchange between the two states. That reporting prompted national security officials to review how operational plans and intelligence could have been disclosed, and whether those disclosures were tied to bets that later resolved on Polymarket’s platform.
Polymarket did not provide a public comment in response to media queries tied to the Israeli announcement. The company maintains an overseas exchange used largely by crypto-based traders and has been working in parallel on plans for a U.S. app that would operate under CFTC oversight after regulatory engagement earlier in the administration transition.
Investigators are reported to be tracing communication and financial flows that could connect military personnel and civilians to wallet addresses and account histories on the platform. Prosecutors have emphasized that this is the first known instance where arrests have been publicly linked to alleged use of classified military information to place prediction-market bets.
Analysis & implications
The case underscores a new intersection of national security and online finance: crypto-enabled prediction markets can create incentives for leaking or trading on privileged information. If proven, the alleged misconduct would illustrate how digital trading venues can monetize real-time operational intelligence, complicating force protection and operational secrecy.
For militaries, the implications are immediate. Personnel with access to timing or targets of operations may face novel temptations to monetize that knowledge, and even isolated leaks can reveal patterns or signal intentions to adversaries. Experts warn such behavior can increase risk to troops by telegraphing capabilities or timelines, and may force militaries to tighten both internal vetting and monitoring of communication and financial activity.
Regulatory differences between platforms matter. Kalshi, as a U.S.-regulated exchange, explicitly bars wagers on war and assassination and settles trades in dollars under CFTC oversight. Polymarket’s overseas crypto platform is less constrained by U.S. regulators and has drawn markets that U.S. authorities would not permit on domestic exchanges. That regulatory gap creates friction: operations occurring globally can intersect with trading venues outside a nation’s enforcement reach.
Politically, the episode could revive debates in Washington and other capitals about how to govern prediction markets that touch on public safety and national security. The involvement — reported in U.S. outlets — of advisers and investors connected to political figures has already fueled scrutiny over whether policy shifts favoring such platforms raise conflict-of-interest or ethical concerns.
Comparison & data
| Platform | Regulation | Primary currency | Restrictions |
|---|---|---|---|
| Polymarket | Overseas exchange (not CFTC-regulated) | Cryptocurrency | Fewer U.S.-style content restrictions; controversial markets appear |
| Kalshi | CFTC-regulated (U.S.) | U.S. dollars | Bans markets on war, terrorism, assassination |
The table highlights regulatory contrasts. Polymarket’s overseas, crypto-based model has allowed markets that would be prohibited under the CFTC, while Kalshi operates within explicit U.S. rules that limit war-related contracts. Those structural differences influence where contentious markets migrate and how investigators trace illicit activity across jurisdictions.
Reactions & quotes
“We have arrested several people and indicted two on suspicion of bribery and obstruction of justice in connection with alleged wagers tied to classified information.”
Tel Aviv prosecutors (public statement)
“If someone is doing something they know they shouldn’t be doing, they’re much more likely to be doing that on Polymarket than Kalshi.”
Joseph Grundfest, former SEC commissioner and Stanford law professor
“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
These responses frame the incident both as a law-enforcement matter and a national-security concern, with legal scholars stressing the operational downside of markets that can monetize classified information.
Unconfirmed
- Which exact Polymarket trades and wallet addresses are under investigation have not been publicly disclosed by prosecutors.
- Whether the January Polymarket trade that converted $32,000 into $400,000 relied on classified intelligence remains unresolved and unproven.
- Details about the numbers wagered by the indicted individuals, or whether they profited, have not been released.
Bottom line
This case marks the first public instance of arrests linked to alleged use of classified military information to place prediction-market bets. It highlights how new financial technology and cross-border trading venues can create vectors for intelligence leaks and insider profiteering that traditional oversight regimes did not anticipate.
Expect investigators in Israel and other nations to examine personnel access controls, financial behavior, and communications more closely. Regulators and militaries will face pressure to close jurisdictional and regulatory gaps, and to develop detection tools that can map crypto flows to real-world leaks without undermining legitimate research or speech.
The unfolding legal process will determine whether prosecutors can prove the alleged chain of information from classified sources to on-chain wagers. Until more details are released, governments and platforms alike will weigh how to balance market innovation with operational security and public safety.
Sources
- NPR — U.S. news outlet reporting on the Tel Aviv prosecutor statement and related reporting (press).
- Kan News — Israel public broadcaster; reported on investigators examining Polymarket wagers tied to a June 2025 strike (public broadcaster).
- Polymarket — Company platform (company site).
- Commodity Futures Trading Commission (CFTC) — U.S. regulator that oversees Kalshi and restricts certain event markets (regulatory agency).
- Kalshi — U.S.-regulated exchange offering event contracts in dollars (company site).
- Stanford Law School — Academic institution; Joseph Grundfest is a former SEC commissioner and law professor cited on regulatory and security risks (academic).