Blockchain investigator ZachXBT has flagged a suspected security incident involving Polymarket, the world’s largest decentralized prediction market, after on-chain data indicated that more than $520,000 was drained from smart contracts on the Polygon network.

According to details shared by ZachXBT, two contracts appear to have been affected, with funds reportedly moved to an attacker-linked address. The impacted wallets include 0x871D7c0f9E19001fC01E04e6cdFa7fA20f929082 and 0x91430CaD2d3975766499717fA0D66A78D814E5c5, with the stolen assets allegedly sent to 0x8F98075db5d6C620e8D420A8c516E2F2059d9B91.

Polymarket responded to the reports in a post on X, saying it is aware of an issue related to its rewards payout system and is currently investigating. The team emphasized that user funds and market outcomes remain secure, describing the event as a compromise of an internal operations wallet rather than an exploit of core smart contracts or platform infrastructure.

Polygon Labs CTO Mudit Gupta also addressed the incident, stating that the core protocol and user assets were unaffected. “Polymarket contracts are safe. User funds are safe. Looks like their market initializer was compromised. No impact to the users or the contracts,” he said.

Polymarket has yet to publish a detailed statement through its main official channels. CoinDesk has reached out to the company for further clarification.

The incident comes amid increasing scrutiny of operational security risks in decentralized finance, where compromises of administrative keys or supporting systems can still result in significant losses even when core smart contracts remain intact.