In the final hours of President Biden's term, a Polymarket trader made around $300,000 correctly betting on Biden's last-minute pardons, according to new data provided to NPR by an analytics firm that examines cryptocurrency transactions.

As Biden issued a wave of pardons just hours before leaving the White House, the Polymarket trader bet big on four names, with the odds of those pardons occurring rapidly dropping to near zero on the prediction market site.

The trader, whose identity is not publicly known, placed around $64,000 worth of bets that Biden would issue pre-emptive pardons for Jim Biden, the former president's brother, former Rep Liz Cheney, Sen. Adam Schiff, former Rep. Adam Kinzinger — all prominent critics of President Trump. While none were ever charged with crimes, all four were given pardons to shield them against possible prosecution in Trump's second term.

A month earlier, the same bettor placed a well-timed wager on Polymarket that Biden's son, Hunter, would receive a pardon over gun and tax charges.

Together, those five bets netted the trader $316,346 in profits, according to an analysis by the Paris-based analytics company Bubblemaps, which shared its findings exclusively with NPR.

"The odds of this happening by random chance are virtually zero," said Columbia Law School's Joshua Mitts, who advises the Department of Justice on insider trading cases.

"The trader could've been a White House insider," he said. "But the trader could have possessed the information without being an insider," said Mitts, who published a paper last month estimating that $143 million in profits have been earned on Polymarket by bettors with insider information.

The trades linked to Biden's pardons show that individuals could have been profiting from confidential government information before President Trump returned to office, when prescient bets related federal policy and military strikes on sites like Polymarket started to draw intense scrutiny.

Polymarket did not return a request for comment.

Sleuthing crypto transactions linked to Biden pardons

To piece together the suspicious trades related to Biden's pardons, Bubblemaps' forensic investigators looked at Polymarket trades using pattern-matching artificial intelligence software. They discovered two accounts had a perfect track record of betting on Biden pardons.

"We looked at all the accounts trading on this one market and looked at their mutual transactions," Nick Vaiman, Bubblemap's founder, told NPR in an interview. "And we found a connection between two accounts, which was a shared deposit wallet."

That means the analysts determined that both accounts were sending profits from Polymarket bets to the same cryptocurrency wallet on the site Kraken, a U.S.-based crypto exchange.

"Exchanges like Kraken don't offer information on individual accounts," Vaiman said. "We've tried desperately, but they don't give up this information easily."

Kraken has "know-your-customer" rules similar to a bank, requiring its customers to verify their identities before using the exchange. Yet it remains difficult to publicly identify a customer based on a crypto wallet alone.

Federal prosecutors often find that crypto wallet-holders engaging in insider trading do so through other people or shell companies, said Mitts. "If the government subpoenas, and gets data back showing some entity did the trading that has no connections to the White House, that's where the trail runs cold."

And even when a wallet on a cryptocurrency blockchain is connected to a person, a legal case of insider trading is far from open-shut, Mitts added.

"If it was misappropriation of information, the problems for prosecutors begin there," he said. "Who was misappropriating? Could you prove it? Could you prove the conditions under which they got the information?"

Biden pardons trades follow a string of other suspected insider traders profiting

Prediction markets, like Polymarket and its main rival, Kalshi, have flourished in Trump's second term. The administration has embraced an industry once considered a pariah in Washington over fears that the markets could be ripe for abuse and manipulation.

The investment firm Bernstein projects that in the next four years, prediction markets could become a $1 trillion industry, and the Trump family is getting in on the action. Donald Trump Jr., the president's son, is an adviser to both Kalshi and Polymarket.

As millions of people turn White House announcements and geopolitical episodes into opportunities to make money, there have been a series of controversies over suspected insider trading.

Hours before Venezuelan leader Nicolás Maduro was toppled by U.S. forces in January, a Polymarket trader placed a bet that netted $400,000. Likewise, an account trading under the username "Magamyman" made more than $500,000 after wagering on Polymarket that Iran's Ayatollah Ali Khamenei would soon no longer lead Iran. Not long after the bet was placed, an Israeli strike killed him.

Most recently, a group of new accounts on Polymarket raked in hundreds of thousands of dollars in profits by betting that the U.S. and Iran would reach a ceasefire before the agreement had been unveiled.

U.S. prosecutors have not announced any investigations or charges over potential insider trading. In Israel, authorities arrested several people in connection to a case alleging that military reservists traded on Polymarket using classified military intelligence.

The largest U.S. prediction market, Kalshi, is regulated by the Commodity Futures Trading Commission, a status that is being contested in court by dozens of states.

The CFTC prohibits betting on markets related to war, assassinations and terrorism, but otherwise has overseen the industry with a light touch, in contrast to the Biden administration, which prohibited most types of "event contracts" except those related to things that had clear public value, like the weather, oil futures and grain prices.

Polymarket, too, has been welcomed by the Trump administration.

Under Biden, the Federal Bureau of Investigation raided the home of Polymarket's CEO and forced the site to wind down in the U.S. It continues to operate mostly as an overseas exchange, with its largest site accessible by Americans only via virtual private network. Unlike Kalshi, Polymarket uses cryptocurrency, making it easier for traders to remain anonymous.

But Trump's law enforcement agencies have taken a more hands-off approach to Polymarket's most controversial markets on everything from conditions in Gaza, war to the next nuclear detonation.

"These markets are problematic," said Nizan Packin, a law professor at Baruch College. "If we want to offer this type of gambling about geopolitics and elections, we need to do this in a proper way, which means guardrails that we have created after we studied the consequences and the problems. This is not something that was done," said Packin, who co-authored a new paper in the the journal Science examining the risks of online prediction markets.

"Without clear regulation, and clearer and stricter enforcement, the gray zone becomes larger and more questions should and will be asked," she said.