Israel Arrests Two Over Alleged Insider Polymarket Bets on Military Strikes

Israeli authorities have arrested and indicted a military reservist and a civilian for allegedly using classified information to place high-stakes bets on the crypto prediction platform Polymarket.

In a joint statement issued Thursday, Israel’s Defense Ministry, the Shin Bet internal security service, and national police had confirmed that an investigation uncovered evidence the reservist obtained secret operational intelligence and used it to inform wagers on potential military action.

Authorities allege the classified information was exploited for financial gain through prediction markets tracking whether and when Israel would strike Iran.

Prosecutors are pursuing criminal charges including security-related offenses, bribery, and obstruction of justice. Officials said the reservist had been working with Shin Bet at the time, intensifying concerns about internal breaches of sensitive defense information.

The case places a spotlight on the growing risks surrounding blockchain-based prediction markets, where users can place cryptocurrency-denominated bets on geopolitical events in real time.

According to Israeli state-owned outlet Kan, a Polymarket account operating under the name “ricosuave666” placed multiple wagers in June 2025 related to Israel’s military posture toward Iran.

The account reportedly bet tens of thousands of dollars and generated more than $152,000 in profits, including over $128,000 from a market predicting military action by a specific deadline. Authorities have not confirmed whether the arrested individuals are linked to that account.

The incident follows broader scrutiny of prediction markets after a separate Polymarket user reportedly profited roughly $400,000 from a wager on the political fate of Venezuelan President Nicolás Maduro shortly before he was captured by US forces. Such episodes have intensified global concerns that insider knowledge could be weaponized for profit, undermining both national security and market integrity.

Israel’s Defense Ministry warned that using classified information to place bets poses a “real security risk” to military and national operations. Officials emphasized that defense and law enforcement agencies will continue pursuing anyone found to be exploiting secret intelligence for personal gain.

A lawyer representing the reservist described the indictment as “flawed” and stated that the charge related to harming national security has been dropped.

The arrests underscore a deeper tension emerging at the intersection of crypto-powered prediction markets and real-world conflict — where decentralized finance meets state secrecy, and the stakes extend far beyond profit.