Polymarket Users Lose Funds in Third-Party Auth Breach

Polymarket has confirmed that recent account breaches were linked to a third-party authentication provider, following reports from multiple users of unauthorized access and drained balances. The decentralized prediction market platform said the issue was identified and resolved, though it did not disclose the number of users affected or the value of the stolen funds according to reports. Users who signed up using an email-based login system reported suspicious login attempts and wiped balances, with some losing thousands of dollars in the process according to user reports.

The platform addressed the issue on its official Discord channel, stating that the breach originated from a vulnerability in the third-party tool used for user authentication. The company emphasized that it takes security very seriously and has taken steps to mitigate the issue, ensuring no further risks remain according to company statements. Social media users speculated that the third-party login service in question could be Magic Labs, a popular tool for creating non-custodial Ethereum wallets and enabling email-based logins based on speculation.

Another user on X shared their experience, noting that their account was drained despite having two-factor authentication enabled. The incident has raised concerns about the use of third-party login services in the crypto space, particularly among newcomers who rely on such tools for easier access to digital platforms according to user reports. Multiple users who used Magic Labs to register for Polymarket accounts confirmed they were impacted by the breach according to user reports.

User Reactions and Financial Losses

Affected users began sharing their experiences on Reddit and X, describing unexpected login alerts and the sudden disappearance of their funds. One user noted that their account was reduced to just one cent, despite no signs of device compromise or suspicious activity on other linked services according to user reports. Another user confirmed a loss of around $2,000, despite having two-factor authentication active according to user reports.

The breach has also led to speculation about the broader security of email-based login systems. Magic Labs is particularly popular among first-time crypto users who do not yet have digital wallets, and this incident has highlighted potential vulnerabilities in such platforms according to industry analysis. A third user reported that their high-ranking Polymarket account was fully drained, while a fourth user said a testing account used for practice trading had also been emptied according to user reports.

Broader Implications for Polymarket and the Crypto Ecosystem

Polymarket has acknowledged the breach but has not named the third-party provider involved, nor has it provided details on the scale of the incident. The company said it has contacted affected users and is working to address the problem, though it has not yet offered compensation or further clarity according to company statements. This is not the first time Polymarket has faced security issues. In September 2024, similar problems emerged involving users who logged in via Google accounts, where attackers exploited a "proxy" function to move USDC funds to phishing addresses according to security reports.

This latest breach adds to a series of security incidents affecting crypto platforms. In November 2025, a phishing campaign targeting Polymarket comment sections led to over $500,000 in user losses according to security analysis. These events highlight the growing risks associated with decentralized platforms and the reliance on third-party authentication tools. Users are now more cautious about how they access their accounts and what tools they use for identity verification.

Investor and Analyst Concerns

Industry observers are watching closely to see how Polymarket will respond to the breach and whether it will take additional steps to improve user security. The platform's reputation and user trust are at stake, and repeated incidents could deter new users from entering the market. Analysts are also questioning the broader implications for the crypto industry, particularly regarding the use of third-party tools that lack transparency or accountability.

The recent breach underscores a growing concern among investors about the security of digital asset platforms. As the crypto market continues to expand, incidents like these could influence regulatory scrutiny and user behavior, potentially shaping the future landscape of online trading and digital finance according to industry experts.