Wintermute CEO opposes prediction market insider trading: profiting from retail investors is extremely unethical.

Industry-leading market maker Wintermute’s CEO Evgeny Gaevoy recently publicly stated his strong opposition to insider trading in prediction markets. He believes such behavior is not only unethical but also a direct exploitation of uninformed users. These remarks come from an industry insider with deep market understanding, reflecting the increasingly prominent risk issues in prediction markets.

The Ethical Dilemma of Insider Trading

CEO’s Core Position

Gaevoy’s views can be summarized in several key points:

• Normalizing insider trading would romanticize it as a “feature” rather than a flaw, which is very unfortunate
• He “looks down on” those who engage in insider trading on prediction markets like Polymarket or Kalshi
• Even a hint of non-public information should be firmly avoided in trading on these markets
• Knowing that a trade is risk-free but still speculating is “extremely unethical,” essentially profiting from uninformed individuals

Why Is This View Important?

As a top global crypto market maker, Wintermute has deep expertise in derivatives markets. According to relevant information, Wintermute’s analysis capabilities in the Bitcoin options market are recognized by the industry—its strategists’ observations of the options market are widely cited, and the views of its OTC trading head can influence market participants’ decisions. This professional standing gives the CEO’s moral call more weight.

Concerns About Prediction Markets

The Real Threat of Insider Trading

Prediction markets (such as Polymarket and Kalshi) involve real funds and result predictions, making them naturally attractive to those with non-public information. Participants include politicians, regulators, corporate executives, etc., who may hold undisclosed information. When such information is used for trading, it constitutes insider trading.

Legal and Regulatory Risks

Gaevoy emphasizes that “insiders may end up behind bars for trading on Polymarket.” This is not unfounded—according to relevant reports, U.S. lawmakers have proposed banning officials from using prediction markets for insider trading. This indicates that regulators are highly concerned about insider trading in prediction markets, and enforcement actions may not be far off.

Lessons for Market Participants

Warning to Retail Traders

Gaevoy’s remarks are essentially a warning to retail traders: do not bet against those who hold an informational advantage. In prediction markets, if your counterparty has non-public information, you are being “harvested” while knowing that you can’t lose. This asymmetry of information is fundamentally unfair.

The Need for Industry Self-Regulation

A top market maker CEO’s public stance also reflects industry calls for more standardized development. When market participants begin to self-reflect and criticize misconduct, it indicates that the industry has recognized the seriousness of the problem.

Future Outlook

As an emerging asset class, prediction markets are entering a phase of tightening regulation. With increased scrutiny from U.S. regulators on insider trading by officials, prediction market platforms may be forced to implement stricter verification mechanisms. This could include:

• More rigorous identity verification for participants
• Deeper monitoring of trading behaviors
• Early warning and prevention of suspicious trading patterns

In the long term, establishing a relatively fair and transparent prediction market ecosystem requires joint efforts from market participants, platform operators, and regulators.

Summary

Wintermute CEO’s stance touches on a core issue in the development of prediction markets: how to prevent those with information advantages from exploiting ordinary participants. This is not only a moral issue but also a necessary condition for market health. For retail traders, understanding this is crucial—information asymmetry is the greatest risk in any market. Regulatory tightening is an inevitable trend, but more important is the self-discipline and vigilance of market participants themselves.