Polymarket’s move to hire an in-house trading desk that will trade against its own users raises immediate integrity and UX concerns for traders and treasuries. A Columbia University study cited on platform activity found as much as 25% of reported volume was artificial — with spikes to 60% in some periods and $2.59 billion of inflated reported volume — a backdrop that sharpens the operational stakes of this decision.
Conflict of interest and UX consequences of Polymarket hiring in-house team
An internal trading desk creates an information asymmetry: one-sided access to real-time order flow and platform operational signals that other participants lack. Information asymmetry is when one party has materially better data than another. That disparity translates into specific UX risks: perceived unfairness increases friction, reduces conversion, and lengthens the decision path as users second-guess market prices and confirmation modals.
Polymarket’s own market history compounds the UX problem. Academic analysis and reporting have flagged significant artificial activity in on-chain volume, while an alleged insider trade that netted over $1,000,000 in 24 hours underscores how privileged access can be exploited. For end users this shifts the interaction heuristic from “market discovery” to “house advantage,” increasing abandonment during onboarding and lowering active participation rates among risk-sensitive institutional wallets. For custodial treasuries and market-making counterparties, the cost is practical: higher monitoring overhead, additional pre-trade compliance steps, and longer reconciliation cycles.
Regulatory, liquidity and operational risks to U.S. re-entry
Polymarket previously paid a $1.4 million CFTC penalty in 2022 for operating an unregistered derivatives venue and temporarily exited the U.S. market. It has since pursued formal legitimacy, including acquiring the CFTC-licensed derivatives exchange QCEX for $112 million and securing an amended Order of Designation in November 2025. Those moves materially changed the platform’s regulatory posture and operational checklist.
Launching an internal desk that directly competes with customers could be read as contrary to regulatory safeguards that aim to limit conflicts of interest. Regulators typically scrutinize activities that concentrate informational advantages inside a platform. Renewed attention from oversight bodies would increase compliance friction for users and partners: additional disclosures, delayed transaction state updates, and more intensive permission transparency checks. Markets rely on perceived fairness for liquidity; if users interpret the desk as the “house,” participation may drop, producing the liquidity paradox where a team meant to improve depth instead accelerates volume erosion.
Next verified milestone: monitor regulator statements and the platform’s post-launch transparency measures, and track short-term user activity and liquidity metrics to gauge whether the change reduces or intensifies onboarding friction. Related: review of Polymarket’s transparency controls and order-flow disclosures.
Polymarket’s choice to field an in-house trading team trades short-term liquidity claims for a higher likelihood of trust erosion and regulatory scrutiny. The platform’s prior regulatory penalty, reported artificial volumes and the insider-trade example make this an operational inflection point for user experience and institutional engagement.
