Polymarket Users Victimized in Third-Party Hack, $3.9M in Refunds Initiated
- Polymarket users experienced unauthorized withdrawals due to a hack of an unnamed third-party provider.
- The platform has initiated refunds totaling $3.9 million and resumed trading after addressing the issue.
- This incident precedes heightened trading expected during the U.S. midterm elections on November 3.
On Thursday, some users of the international exchange of prediction market platform Polymarket reported unauthorized withdrawals from their accounts, attributed to a hack involving a third-party provider that has not been publicly identified. The company’s U.S. platform remained secure throughout the incident.
In response, Polymarket contacted law enforcement and committed to reimbursing affected traders. The extent of the breach is not fully clear, but as of Friday afternoon, the platform indicated it had refunded 95% of the impacted wallets. “In total, we’re returning $3.9M to traders: the $2.7M plus $1.2M to cover pause-related losses,” Polymarket communicated.
Trading was halted on the international platform after traders started reporting the unauthorized transactions on social media. Polymarket resolved the issue, and trading resumed at 3 p.m. ET on Thursday. Users with less than $10,000 withdrawn will see their funds restored by October 30, while those with larger amounts must complete a release form for their reimbursement.
A source revealed to CNBC that the hack originated from DebugBear, a website performance monitoring service, which confirmed it was affected by a security incident in a post on X. The matter has been referred to U.K. law enforcement, given DebugBear’s location.
DebugBear has yet to provide a response to media inquiries regarding the incident. An analysis from analytics firms Betting Intelligence and Polysights indicated that one account withdrew at least $2.7 million through 710 additional wallets during the event.
“This is certainly a significant and new form of breach that we’ve seen on Polymarket,” stated Dan Zimmermann, chief intelligence officer at Betting Intelligence, noting the critical timing ahead of the upcoming midterm elections. The platform operates as a decentralized finance exchange on the Polygon blockchain and lacks regulatory oversight in the U.S.
This disruption occurs just days prior to the midterm elections on November 3, when both Polymarket’s international and U.S. exchanges are expected to experience increased trading volume. A similar incident involving a third-party vendor compromise was reported by Polymarket in June, which also resulted in the company offering refunds to affected users.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
News Courtesy of CNBC
