Polymarket under fire over $7M Ukraine mineral deal bet

Polymarket, a decentralized prediction market, has faced criticism after users reported the “wildest” governance attack in recent history. Polymarket records show that the market transacted more than $7 million in trading volume before closing on March 25.

The bet involved asked if US President Trump would agree to a deal with Ukraine for rare earth minerals before April. Even though that event didn’t happen, the market was settled as “Yes.”  This allowed some traders to cash out big gains and left others with big losses.

Crypto threat experts say this could be a sign of a “governance attack” in which a “whale” from the UMA Protocol “used his voting power to manipulate the oracle.

As a result, it allowed the market to settle false results and successfully profit. A Polymarket representative talked about the problem on Discord, saying that they knew the result was unexpected.

In a statement, Polymarket said, “We are aware of the situation regarding the Ukrainian Rare Earth Market. This market resolved against the expectations of our users and our clarification. Unfortunately, because this wasn’t a market failure, we are not able to issue refunds.”

This is how the alleged manipulation happened

Polymarket uses the blockchain oracles of the UMA Protocol to get external data that helps settle market results and confirm events that happen in the real world.

This is how the polymarket got here. An insider whale is said to have spent 5 million UMA tokens to vote “YES.” This whale had 25% of the votes, which was enough to change the choice made by most people. More than $7 million was bet on the market. This means it had a big effect on the money.

After the final results came out, buyers disagreed with the choice. They said that Trump and Ukraine had not officially agreed to anything. Even though these people were against it, the market ultimately agreed with the whales, giving them profits, while traders who bet “NO” lost a lot of money. 

A user says that it was just extreme negligence from both Polymarket and UMAprotocol

However, a user has a different view of how this played out. According to him, when all voters had committed, two minutes before the end of the pledge period at 11:58 PM UTC on Sunday, Polymarket sent out an update saying it was too early for the market to settle and there wasn’t a Yes yet.

UMA whales proceeded to reveal Yes in spite of the clarification. This was to avoid being slashed for an incorrect vote, even though they could have coordinated to abstain from voting and roll the vote.

After settling on yes, people thought Polymarket might still use the emergency pause function until the end. Two minutes before the reveal period ended on Monday at 11:58 PM UTC, Polymarket made it clear again that the market would actually just settle according to UMA’s vote.

The “tycoon” who “manipulated the oracle” did not exist. This result was decided by the same UMA whales who vote in every dispute. These voters are either mostly on the UMA team or don’t trade on Polymarket. 

According to the user, Polymarket is much more to blame for their last-minute clarification. They should have either done it much earlier in the commit period or not at all, and there’s no good reason why they didn’t do it earlier other than being short-staffed and not paying attention on the weekend.

Was there a Trump-Ukraine deal?

Reuters reports that Trump did say on March 25 that he thought the U.S. and Ukraine would sign a deal “soon” to share revenue. On the other hand, neither government made it public that an agreement had been reached.

A lot of traders say that an assumption of a deal is not the same as an agreement. One angry user on Polymarket wrote, “This is a big joke. Zelensky just announced they are looking into a bigger deal,  which means there was no deal before. Wow, a real scam.”

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