A clever trader reportedly made a bold play on the prediction market Polymarket, walking away with $233,000 in profits by cleverly outmaneuvering automated trading bots during a quiet weekend session. This move has sparked a lot of buzz in the crypto community, with debates raging over whether it was brilliant strategy or borderline market manipulation that should face consequences.

The action happened late on a Saturday night, a time when crypto trading activity usually drops off sharply. In these low-volume periods, even modest orders can swing prices more than usual.

(According to CoinDesk, they contacted Polymarket for an official statement on the incident.)

How the Trade Went Down

Details emerged mainly from a pseudonymous Polymarket user named PredictTrader, who shared the breakdown on X - a thread that quickly went viral among traders.

The trader, going by the handle @a4385, started snapping up “UP” shares aggressively in a short-term Polymarket contract betting on whether XRP (the payments-oriented crypto) would close higher or lower between 12:45 PM ET and 1:00 PM ET on January 17.

As buying pressure built, the price of UP shares climbed all the way to around 70 cents, even though XRP's actual spot price on big exchanges dipped slightly (about 0.3% lower during the same window).

This price mismatch created the perfect trap for Polymarket's liquidity bots. These automated systems are built to arbitrage differences between the prediction market and real spot prices - so as UP shares rose on Polymarket, the bots kept selling more of them to provide liquidity, completely ignoring the weakening real-world XRP price.

Thanks to this, the trader quietly accumulated a massive position: roughly 77,000 UP shares at an average entry price of just 48 cents.

Then came the dramatic twist - straight out of a high-finance thriller. Right before the contract resolved (only two minutes left), a Binance wallet believed to belong to the trader executed a hefty $1 million XRP buy order. That single push lifted XRP's price by about 0.5%, enough to flip the Polymarket outcome to “UP.”

Suddenly, those 77,000 shares became redeemable at $1 each - turning a low 48-cent average cost into a huge windfall.

The trader quickly sold the XRP back on Binance, letting the spot price drop again. Total out-of-pocket cost for the whole setup? Around $6,200. Meanwhile, the bots reportedly gave back an entire year's worth of gains in one night, per tracking data from PolymarketHistory.

And it didn't stop there - the same playbook was reportedly repeated across several other low-liquidity weekend markets, systematically draining bot-provided liquidity. Some bots learned and pulled back; others got cleaned out.

Why This Highlights the Need for Smarter Bots

This whole saga exposes real weaknesses in many of Polymarket's current automated market makers. These bots treat every price tick the same way - they don't factor in context like trading volume, liquidity conditions, potential adversarial plays, or the unique pressures right before resolution.

The future likely belongs to more intelligent, adaptive bots that can read the room: who they're facing off against, what time it is, and when it's smarter to sit out entirely.

Even industry voices are weighing in. Chris Tremulis, Global Head of Commodities Compliance at Goldman Sachs, shared his thoughts on X: preserving fair and transparent markets will be essential if prediction platforms want serious institutional interest.

“Prioritizing market integrity will be key for the leaders of prediction markets to achieve meaningful institutional adoption (if that’s what they want),” he noted. “Stronger rulebook enforcement, quicker investigations from exchange surveillance staff, published disciplinary outcomes, and referrals to the CFTC will go a long way. Early days.”

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