A Prediction Market Participant Made $436K from Bets Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars from wagers on the downfall of Nicolás Maduro just before it was publicly declared, sparking debate about potential gains made from confidential information of American actions.
Sudden Shift in Predictions
Bets placed on the crypto-platform, an online prediction market, that the Venezuelan president would be no longer in control by the end of January surged in the hours before Donald Trump declared on the weekend that the president had been seized.
A particular user, which joined the platform in December and took four positions, all on the Venezuelan situation, made more than $nearly half a million from a starting bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a cryptographic address for identification.
Market Signals Before Announcement
Trading information shows that participants put the odds of a political change at just a low 6.5 percent in the afternoon of the prior Friday.
Yet the market's assessment had climbed to 11% by late Friday night and spiked dramatically in the morning of January 3rd, pointing to a sharp shift in positions just before the public announcement was made.
"This particular bet has all the hallmarks of a bet based on non-public details," commented a financial reform advocate.
Several of other individuals also profited large payouts from predicting the capture.
Political Attention Grows
Elected officials are growing concerned.
A new rule put forward on recently would prevent public officials from making trades on forecasting platforms if they have "material nonpublic information" related to a bet.
Market Background
Prediction markets have surged in popularity in the United States, with participants able to bet on everything from sports to political events.
The industry were examined under the last presidential term. But it has experienced less resistance during the current presidency.
Trading on insider information is a crime in the traditional financial markets, but there are fewer regulations in the event betting space.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
