What happened

The escalation of U.S. and Israeli military strikes against Iran saw social media platforms flooded with fake AI-generated visuals, including "devastated" military bases and fake drone footage expressly in order to manipulate opinions and move market prices on Polymarket and Kalshi.

Hundreds of millions of dollars were wagered on the timing of strikes and the fate of Ayatollah Ali Khamenei and other scenarios, resulting in huge financial losses for many traders. 

However, a handful of accounts, most notably "Magamyman", scooped hundreds of thousands of dollars in profits. Magamyman reportedly earned about USD 430,000 by predicting that the U.S. would strike Iran on February 28. 

Separately, analytics firm Bubblemaps identified at least six accounts that earned approximately $1 million by correctly betting the US would attack Iran by 28 February - all newly created in February, with some bets placed hours before the strikes began. 

The findings led to an investigation by Israeli police into potential insider trading or coordinated manipulation. 

Why it happened

Polymarket’s war markets create strong financial incentives to influence perceived probabilities of events; AI tools make it extremely easy to generate convincing but fake “evidence” that can nudge public sentiment and thus prices.

Platforms and traders can hide behind technical language about “prediction” and “wisdom of crowds,” while providing little transparency about suspicious trading patterns, moderation of deceptive content, or safeguards against using manipulated or AI‑generated media to sway markets.

Under US commodity trading laws, making trades based on death and war are technically illegal, as those bets create a financial reward for violence and geopolitical instability. However, the trades that paid out upon Khamenei's death occurred on the largely unregulated international version of Polymarket, which some Americans access through virtual private networks.