They wrote ZachXBT a solid script, each one more profitable than the last

Have you ever heard of such a story: the police issue a notice that they are about to catch a thief, and the thief ends up making a fortune thanks to this notice.

This is exactly what played out in the crypto community in the past 48 hours. In this storm, there were top detectives known as "on-chain police," crypto giants controlling billions of funds, arch-rivals at odds with each other, and a tool that elevated the whole event's strangeness to another level—a prediction market.

Before starting this story, we first need to introduce ZachXBT, hailed as the "on-chain detective." His modus operandi is easy to understand: he stares at the publicly available but anonymous transaction records on the blockchain, piecing together fragments like a puzzle to form a complete chain of criminal evidence.

He had previously single-handedly tracked and exposed a $243 million Bitcoin theft targeting a single victim and uncovered multiple cases linked to the North Korean hacker group Lazarus (with a total amount involved exceeding $200 million). On February 23, ZachXBT suddenly posted a preview:

Will announce on the 26th an inside trading scheme by multiple employees of a crypto project team leveraging internal information.

As soon as the news broke, the prediction market Polymarket promptly launched a special on "Which company will ZachXBT accuse of insider trading," mentioning 27 top companies in the crypto space such as the multi-billion-dollar daily trading volume platform Binance, the crypto market maker Wintermute accounting for 10% of the global volume, and the token issuance platform Pump.fun with nearly $1 billion in revenue.

Due to the high quality of ZachXBT's past disclosures, shortly after this special was launched on Polymarket, the trading volume exceeded $10 million. Then, on the evening of the 26th, ZachXBT officially revealed that the company in question was Axiom, a decentralized exchange platform founded in 2024 with nearly $400 million in total revenue.

Shortly after the announcement, the special saw a settlement, with the total trading volume reaching nearly $40 million in 2 days. However, in this originally hot topic-driven native crypto prediction market conversation, the peculiarity of the trades and the events behind them made people suspect that this was a carefully orchestrated script.

The "Thief" Personally Steps in to Bet with Insider Information that "I Will Be Caught"

Similar to options trading in traditional finance, in this event, people could buy into the "yes" and "no" of a company being accused. If ZachXBT ultimately accuses the company, buying "yes" for that company would profit, while buying "no" would result in zero.

In the "ZachXBT to Accuse Axiom of Insider Trading" market, two addresses have attracted much attention as they have made significant gains, one earning $350,000 and the other earning $160,000.

The curious onlookers quickly identified that both of these profits belonged to the same on-chain address, 7QG2Le. It was then discovered that this address belonged to Broox Bauer, the Axiom Business Development Lead mentioned by ZachXBT in the insider trading exposé.

According to ZachXBT's post, Bauer used internal company tools to view all user's full privacy wallet data and front-run users in token trades. 7QG2Le is one of the addresses ZachXBT revealed as being used by Bauer for insider trading. ZachXBT also pointed out that he had informed the Axiom team of this event before disclosing it to the public.

This means that at the critical moment, Bauer, who should have made a run for it, not only remained calm after receiving ZachXBT's notification but also effortlessly registered on the prediction market, deposited funds, and bet that he would be accused. He then made $500,000 while doing nothing.

Hiring a Detective to Investigate Insider Trading

Aside from Bauer, there was another account of interest: by betting on Axiom being accused, this account made over 6 times its investment, totaling a profit of $411,000.

Due to its suspicious nature, shortly after the account's profit-taking, ZachXBT posted an analysis of the account, stating that it was "an Axiom user," implying that this account was more normal and part of regular operations.

While this did silence some critics, X blogger omniviolence later analyzed the account, taking the absurdity of the situation to another level. Through a detailed timeline analysis and on-chain tracking, the account was ultimately traced back to gorillacap, a partner at Pump.fun, a competitor of Axiom with similar trading and minting attributes.

Can you believe that ZachXBT, known for unmasking the owners behind anonymous addresses in the finance sector, couldn't uncover this connection?

In ZachXBT's disclosed article, he also clearly stated that this time he was hired to investigate Axiom's misconduct, and the scale of this disclosure was much smaller than his previous multimillion-dollar bombshells.

Connecting many clues together, a logical conspiracy theory emerged: Pump.fun, in order to undermine competitor Axiom, paid top crypto "justice police" ZachXBT to investigate its potential misconduct.

Upon receiving the investigation results, Pump.fun's partner gorillacap took advantage of the timing difference to place early bets in the prediction market, pocketing $400,000, while leveraging ZachXBT's inherent influential reach to tarnish Axiom's reputation.

Just as PolyBeats mentioned hours before ZachXBT's post about the two insider traders and their "PR Crisis Insurance" theory, this scandal that rocked the crypto community once again exemplifies the multiple roles of prediction markets among different groups: information dissemination, insider monetization, insurance hedging.

As the narrative of the prediction market moves into reality, it has already begun to shape the future.