Predicting the market equals manipulating the market? The failure of collective intelligence and the battle for settlement power.

Predicting the market is all the rage. But as you delve deeper, with each Yes/No click, the gears of fate begin to turn.

This paper attempts to analyze the manipulability of choices under a binary game by looking for controversial topics in prediction markets (mainly polymarkets).

Case Selection

<1> Who will HBO identify as Satoshi?

<2> How many gifts will Santa deliver in 2025

<3> Israel strikes Gaza by...?

It also attempts to explore possible market intervention methods from the perspectives of psychology, the crowd effect, game theory of dealers, and mass communication.

The "Who is Satoshi Nakamoto?" bet: The market refuses to believe it's real.

Around the time of the release of HBO's *Money Electric: The Bitcoin Mystery*, a contract on Polymarket was considered a classic example of "narrative falling short of fact": "Who will HBO identify as Satoshi?" (October 2024)

On the surface, this is a collective guessing game in the crypto world's ultimate mystery, with participants trying to bet on who the documentary will identify as the founder of Bitcoin: Len Sassaman, Hal Finney, Adam Back, or Peter Todd, who has never appeared on any long list of conspiracy theories.

The vast majority of cryptocurrency community members, KOLs, and media outlets firmly believe that HBO will reveal the story of the late cryptographer Len Sassaman. This is because Len's life story closely resembles Satoshi Nakamoto's, and his tragic and legendary image aligns with HBO's narrative aesthetic.

Len Sassaman's win rate (Yes) soared to 68% - 70%.

The key to this event lies in its timeline.

Some journalists and insiders who were invited to preview the media session began leaking clips on Twitter and dark web forums. The leaked clips and screenshots clearly show director Cullen Hoback questioning another developer, Peter Todd, and attempting to portray him as Satoshi Nakamoto.

Peter Todd himself even mocked the director on Twitter, indirectly confirming that he is the protagonist of the documentary. At the same time, multiple media outlets' pre-release articles and headlines already used phrases like "doc identifies Peter Todd as Satoshi."

Nevertheless, the most exciting part has arrived. Even with screenshots circulating, the price of Len Sassaman on Polymarket hasn't collapsed; it remains at a high level of 40%-50%!

Because the community refused to believe it. People were brainwashing each other in the comments section: "This is just an HBO smokescreen (Red Herring)," "Peter Todd is just a supporting character, the final twist will definitely be Len."

This is where the opportunity arose. The odds for the Peter Todd / Other option were extremely attractive (at one point only 10%-20%).

This is practically "picking up gold bars from a pile of cheap goods".

Alpha is maximized if and only if the fact contradicts the desire.

People are too eager for it to be Len Sassaman (because he's dead, wouldn't crash Bitcoin, and his story is tragic). This emotional bias has clouded rational judgment. In prediction markets, never bet on what you "hope" will happen; bet on facts.

The rules themselves state: "Who will be identified by HBO as Satoshi", not "Who is actually Satoshi".

Media narrative + emotional resonance. As long as the market is given a compelling story, prices will willingly deviate from the facts.

"Santa Claus Code Gate": When Hardcoding Becomes Options

The second incident seems easier: the NORAD Santa tracking project. Every Christmas, NORAD displays the "number of gifts Santa delivers" on a dedicated website. In 2025, this fun project became a guessing game on Polymarket: "How many gifts will Santa deliver in 2025?"

Then, someone opened the browser console.

Technical traders discovered a hard-coded value, accurate to a single digit, in the front-end JS/JSON file of noradsanta.org: 8,246,713,529. This number is similar in logic to the "gift quantity" of previous years, but is significantly lower than the reasonable range (8.4–8.5B) derived from historical growth rates. It seems more like a temporary script filled in by a programmer when rushing to meet a deadline.

In the market's eyes, this hard code was quickly interpreted as the "ultimate answer":

• Correspondingly, in the "8.2–8.3B" range contract, the price was pushed up from around 60% to over 90%.
• A large amount of capital viewed this as the realization of "information advantage," and the remaining few percentage points as arbitrage opportunities that could be obtained for free.

But the truly subtle point is that once the leak is exploited on a large scale by traders, the hardcode itself becomes a variable that can be triggered.

The NORAD website is centrally maintained, and developers have the authority to overturn previously hard-coded values ​​at the last minute. When "lazy developers" and "hard-coded fraud" become part of social discourse, the maintainers even have an incentive to prove they are not a makeshift team by changing values ​​in real time.

This means that for those who bought large positions at 0.93 for "8.2–8.3B=Yes", what they were really betting on was not how many gifts Santa Claus would "give out", but whether a developer would change that string of numbers in a final commit before launch.

Structurally, this market allows for a variety of "intervention methods" to significantly influence prices.

The NORAD website is centrally maintained, and developers have the authority to overturn previously hard-coded values ​​at the last minute. When "lazy developers" and "hard-coded fraud" become part of social discourse, the maintainers even have an incentive to prove they are not a shoddy operation by changing values ​​in real time.

This means that for those who bought large positions at 0.93 for "8.2–8.3B=Yes", what they were really betting on was not how many gifts Santa Claus would "give out", but whether a developer would change that string of numbers in a final commit before launch.

The prediction market here is no longer about "predicting an objective random variable," but rather a derivative arena for a small group of people who control the system's switches to "bet on how their behavior will be interpreted by the outside world." Those who write front-end code naturally possess the dual power of "spoilers + the ability to tamper with content at any time."

Tech enthusiasts who deploy code crawlers in advance can build up their databases before most people even realize the existence of hard-coding; media outlets or independent media can indirectly influence the maintainers to adjust their strategies by amplifying the narrative of the "hard-coding scandal".

The prediction market here is no longer about predicting an objective random variable, but rather provides a derivative field for a small group of people who control the system's switches to bet on how their behavior will be interpreted by the outside world.

"Gaza Attack" Contract: A Murder Mystery Game Play in the Early Morning

The third incident has the most real-world impact. Thanks to @ec_unoxx for compiling this information; the trader is @poliedge100, the "Little Crocodile Teacher."

A contract concerning whether Israel would attack Gaza before a specific deadline underwent a dramatic price shakeout in the final trading session before its expiration.

Initially, the market widely believed that the probability of a large-scale attack before the deadline was limited, and the price of "No" remained in the high range of 60%–80% for a long time. As time went by, it seemed that "nothing happened" itself was constantly reinforcing the legitimacy of "No".

Then came the familiar pattern: the early morning hours + media offensive + panic selling.

• In the platform's comment section, "Yes" began posting unverified screenshots, local media links, and even old news in large numbers, creating a narrative atmosphere that "the attack has already happened, but the major media outlets are slow to react."
• At the same time, large sell orders appeared on the order book, deliberately breaking through the support level of "No" and pushing the price down to the "junk zone" of 1%-2%.

For holders who are overly reliant on emotions for information, this series of actions is enough to create an "endgame illusion":

While this panic was being created, a small group of people who insisted on fact-checking reached a completely different conclusion from another perspective:

• Before the preset deadline, there was no sufficiently clear evidence of an "air raid" that was unanimously recognized by authoritative media and met the definition of the contract rules;
• From the perspective of the text rules, "No" still has a high probability of being the final valid settlement result.

Thus, structurally, an asymmetrical lottery ticket once again appears:

• The market price treats "No" as a 1% probability;
• Textual evidence and rule interpretations, however, give a real probability far higher than 1%.

What truly sparked the controversy was what happened after the settlement:

• After the close of trading, some suggested settling with "Yes," thus entering a limited period of contention.
• Due to procedural reasons or insufficient resources of the participating parties, this settlement direction was ultimately not successfully overturned;
• The contract was ultimately locked as "Yes," and those who insisted on interpreting the text of the rules could only argue afterward whether "this conformed to the original rule design," but could not change the flow of funds.

This incident starkly exposed the "greenhouse effect" of forecasting markets:

• Public opinion can cause prices to collapse in a short period of time;
• Funds can create the illusion of "smart money retreating" by orchestrating a self-directed sell-off;
• Ultimately, the power to settle accounts often rests in the hands of a very small number of parties with resources and organizational capabilities.

This is no longer a "bias of collective wisdom," but rather a manipulative space created by the interplay of narrative, funding, and the right to interpret rules.

In summary, the three cases above present a different picture regarding market prediction:

• For news initiators and media

Every prediction market can be seen as a real-time thermometer of narrative influence.

Documentary directors, PR teams, and topic creators can all adjust their output pace by observing market trends: which candidates to continue promoting, and which plot points need to be expanded.

In some extreme cases, content creators can even “reverse” their approach by using the betting odds to write market preferences back into the script.

• For the project team/platform

The ambiguity of the rules, the choice of settlement source, and the design of the dispute resolution mechanism will all directly affect "who can profit from the closing event".

A vague oracle and broad discretionary power are tantamount to preserving a "gray area" that can be used by organized forces.

In this space, the prediction market is no longer a passive "outcome registry," but an active tool for creating liquidity.

• For participants (individual investors/KOLs/communities)

Comment sections, social media, and various secondary interpretations constitute a whole set of psychological levers that can be exploited.

By centrally releasing seemingly authoritative screenshots, links, and out-of-context news headlines, perpetrators can quickly push prices from the rational range into the panic or frenzy zone.

In this structure, those with stronger voices (KOLs, influential figures, and investment research accounts) naturally possess the ability to manipulate narratives.

• For hackers and "system players"

Monitoring front-end code, data source updates, news APIs, and even oracle mechanisms can themselves be considered a systematic strategy.

Preemptively identifying hardcodes, configuration errors, and rule-edge situations, and then establishing positions before the market reacts, constitutes a high-leverage "structured alpha."

More aggressive players will directly study how to legally or "skirt" the edges of influencing the source of settlement information, making the world "appear" to be in line with their own position direction in a short period of time.

Finally, to quote @LeotheHorseman's pinned post...

The veracity of information has become irrelevant (in both cognitive and practical terms); people are willing to pay for the truth. Perhaps the most important proposition of our time is how the pricing of information and the pricing of information interact.