The Mysterious Crypto Judges Who Settle Polymarket Disputes

Polymarket, a prediction market, faces scrutiny over its arbitration system for resolving disputed bets, where holders of digital tokens vote to decide which side won.

Garrick Wilhelm joined the crowds piling into prediction markets last month. He quickly came to regret it.

The British Columbia resident signed up for Polymarket and began wagering on events in the Middle East. One available bet was on whether Israel and Hezbollah would reach a cease-fire. Wilhelm put down $567, reasoning that the militant group would never agree to such a deal. "It seemed like a no-brainer," he said.

When Israel reached a truce with the Lebanese government, though, some traders argued that it counted as a deal with Hezbollah. Wilhelm, reading the rules carefully, disagreed.

With millions of dollars at stake, it wasn't Polymarket that decided who was right. Instead, Wilhelm learned that the fate of his bet was up to a loosely organized body of cryptocurrency holders empowered to arbitrate such disputes.

Disputed bets are a growing headache for prediction markets, including Polymarket, as they contend with a surge of new traders and dizzying growth in trading volume. The platforms aim to write clear yes-or-no questions for traders to wager on. But the messiness of real-world events means it isn't always obvious which side was right.

Most prediction-market firms, such as Kalshi, sort out disputes and ambiguities themselves. But Polymarket outsources the task to a third-party service called UMA, which conducts votes when rival factions of traders disagree over who deserves a payout. The voters making such calls are holders of UMA's digital tokens. The more tokens someone holds, the more weight their vote gets. Most voters are anonymous.

Polymarket "is not responsible for any disputes related to the resolution of any Contracts," the platform states in its terms of use.

Many traders and crypto veterans say the UMA voting system is ripe for abuse. Nothing prevents the token holders from voting on disputed wagers in which they have a personal stake.

Over the past year, at least 60% of active UMA voters could be directly linked to Polymarket accounts, according to a Wall Street Journal analysis of Polymarket and blockchain data. In more than 300 disputes -- or nearly one in five during that period -- at least one UMA voter had a financial stake in the outcome of the Polymarket bet they were voting on.

UMA calls itself "decentralized." But blockchain data shows a small group of token holders dominate votes. In most disputes, more than 50% of the votes are concentrated in the 10 largest wallets, the Journal's analysis shows.

Nic Carter, founding partner of investment firm Castle Island Ventures, said Polymarket should stop what he describes as passing the buck for resolving disputes.

"That should be Polymarket's responsibility, not some outsourced, third-party, mysterious, anonymous token holders," Carter said.

Only 0.2% of Polymarket's betting contracts trigger UMA votes, a spokeswoman for the company said. UMA "distributes resolution authority across a transparent, marketwide framework rather than vesting it in any single decision maker," she added.

In a Q&A at Harvard Business School in March, Polymarket founder Shayne Coplan acknowledged that the dispute-resolution process was "messy."

"There's improvements coming soon," Coplan said, without providing details. Polymarket has a data partnership with Dow Jones, publisher of The Wall Street Journal.

Founded by two former Goldman Sachs traders, UMA is overseen by Risk Labs, a foundation registered in the Cayman Islands. James Fry, a spokesman for the foundation, said it had never seen any credible evidence of UMA manipulation.

"The complaints you're hearing come from a small number of traders who lost money on their bets and are looking for someone to blame," Fry said.

When disputes arise, UMA token holders debate how to resolve them on the social-media platform Discord, sharing links to support their arguments. UMA imposes a financial penalty on those who vote with the minority, a rule it says is aimed at pushing voters toward the correct outcome.

So far this year, more than 1,150 Polymarket bets have triggered disputes, surpassing the total for all of 2025, according to Betmoar, a trading terminal for the platform's users.

Another recent dispute revolved around bets on whether the livestreamer Clavicular would announce that he and his partner were pregnant. He did, but critics said it wasn't a "credible" announcement, as required by the contract's rules. UMA ruled that it was indeed credible. Other fights have broken out over wagers on the Iran war.

In Polymarket's early years, its own personnel resolved disputes, regulatory filings show. The platform started farming out the task to UMA in early 2022, when it reached a settlement with the Commodity Futures Trading Commission over allegations that it had violated U.S. rules. Relying on a diffuse group of token holders bolstered Polymarket's argument that it was an offshore platform outside the scope of U.S. regulation.

On rare occasions, Polymarket has overruled UMA's decisions. It also routinely issues "clarifications" to betting contracts to avert potential disputes.

Wilhelm, the novice trader in British Columbia, ended up losing his bet. A lopsided majority of 87% of UMA tokens voted that Israel's cease-fire with Lebanon covered Hezbollah. Wilhelm complained to token holders that the decision was wrong, but his arguments went nowhere.

He and other traders on the losing side created a Discord forum called "Whale Eaters," where they discussed alleged manipulation by UMA heavyweights.

The disgruntled traders zeroed in on UMA.rocks, a startup that lets UMA holders pool their tokens and delegate their votes to a committee. UMA.rocks accounted for 8% of votes in recent disputes and some traders see it as a bellwether for how UMA as a whole will rule.

UMA.rocks founder Lancelot Chardonnet defended its record. "Many traders lose money on Polymarket because they do not read the rules properly and then blame UMA and UMA.rocks simply because we are an easy target," Chardonnet said.

In late April, UMA.rocks fired a member of its voting committee -- who goes by "Scout" on Discord -- over allegations that he had previously engaged in market manipulation.

Contacted over Discord, Scout denied manipulating markets or trying to swing votes to reach blatantly wrong conclusions. But he acknowledged that he routinely placed bets in disputed Polymarket contracts while participating in UMA votes to resolve those same disputes.

Scout, who declined to give his name, argued that such trading benefited the market and helped UMA resolve disputes accurately. Voters without skin in the game spent "five minutes max" researching disputes, while voters like himself were financially motivated to find the best resolutions, he argued.

"You can either have traders with a conflict of interest, or morons with no conflict of interest," he said. "There's not really a good middle ground."