An Prediction Market Trader Earned $436,000 on Wagers on Venezuela's Political Shift.
A bettor profited close to $500,000 on the ouster of Venezuela's president immediately preceding it was publicly declared, sparking debate about potential gains made from non-public details of the US operation.
Changing Odds in Predictions
Predictions made on the forecasting site, an online prediction market, that Nicolás Maduro would be out of power by the end of January surged in the hours before Donald Trump announced on January 3rd that Maduro had been seized.
A single trader, which registered on the site recently and placed four wagers, all on the Venezuelan situation, earned over $436,000 from a modest bet of $32,537.
The identity is unknown. The user had only a blockchain identifier for identification.
Probability Spikes Before Announcement
Market statistics shows that participants put the odds of a political change at just under 7% in the late afternoon of the prior Friday.
Yet these probabilities had increased to over 10% by the end of the day and spiked dramatically in the morning of January 3rd, pointing to a rapid movement in betting activity just before the public announcement was made.
"This specific wager has all the hallmarks of a transaction based on confidential knowledge," said a financial reform advocate.
Several of other traders also profited large payouts from similar wagers.
Legal Questions Grows
Elected officials are starting to take note.
A bill introduced on recently would prevent federal workers from making trades on prediction markets if they have "confidential government knowledge" related to a bet.
The Prediction Market Landscape
Prediction markets have become increasingly popular in recent years, with traders able to predict everything from sports to political events.
Prediction markets were examined under the previous administration. But it has received a warmer welcome during the current presidency.
Trading on insider information is illegal in the traditional financial markets, but there are more ambiguous rules in the forecasting arena.
A spokesperson for another major platform said their site "has clear rules against insider trading of any form."
