Kalshi and Polymarket ‘Death Carveout’ Triggers Controversy, Insider Trading Allegations Related to Iran Airstrikes

Prediction markets Kalshi and Polymarket are facing backlash following trading activity tied to Iran airstrikes and the reported death of Iran’s Supreme Leader, Ali Khamenei.

Kalshi CEO Tarek Mansour defended the platform’s handling of a market centered on whether Khamenei would be removed as Supreme Leader, emphasizing that the company does not allow markets that settle directly on someone’s death.

“We don’t list markets directly tied to death. When there are markets where potential outcomes involve death, we design the rules to prevent people from profiting from death. That is what we did here.”

According to Mansour, the firm settled the market at the last traded price before the time of death, in accordance with its rules. The company also reimbursed all fees associated with the market. Users who opened positions after the reported time of death were reimbursed the difference between their purchase price and the last traded price prior to the event.

Mansour said the platform will work to improve how it surfaces market rules and disclosures.

Meanwhile, blockchain analytics account Bubblemaps alleged that six suspected insiders generated approximately $1.2 million betting on a U.S. strike on Iran. According to the post, the wallets were funded within 24 hours, placed “yes” bets hours before the strike and targeted a February 28 outcome.

The allegations have fueled debate around transparency and fairness in geopolitical prediction markets.

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