Hack of third-party site drains $2.7 million from Polymarket wallets

Traders on Polymarket’s international exchange lost access to their funds on Thursday after a security breach at a third-party provider. The company paused trading on its global platform in response to the disruption. Trading resumed at 3 p.m. ET after engineers fixed the issue on their end.

Two analytics firms, Betting Intelligence and Polysights, analyzed public data to find the scale of the theft. Their review showed that one account moved at least $2.7 million across 710 other wallets on Thursday. Polymarket said it does not yet know the total number of affected users.

A person familiar with the matter told CNBC that the root cause was a hack of DebugBear, a website performance monitoring platform. DebugBear confirmed it experienced a security incident on Thursday in a post on X. Because DebugBear is based in the United Kingdom, Polymarket referred the case to U.K. law enforcement.

The company pledged to reimburse every affected trader. The U.S. platform was not compromised, and trading there continued without interruption. DebugBear did not immediately respond to requests for comment regarding the details of the breach.

This incident marks the second time in four months that Polymarket has dealt with a third-party vendor compromise. A similar event occurred in June, when the company also promised refunds to impacted users.

The platform operates as a decentralized finance system on the Polygon blockchain and is not regulated in the U.S. The timing is tight, as both the international and U.S. exchanges are expected to see high trading volumes ahead of the U.S. midterm elections on Nov. 3.