An Forecasting Platform User Profited $436K from Bets on the Ouster of Maduro.
A trader made nearly half a million dollars on the ouster of Venezuela's president shortly prior to it was officially announced, sparking debate about potential gains made from confidential information of the US operation.
Market Movement in Predictions
Predictions made on the forecasting site, a blockchain-based service, that the Venezuelan president would be removed from office by the end of January increased in the hours before President Donald Trump stated on January 3rd that the president had been taken into custody.
A single trader, which registered on the site last month and took four positions, all on the Venezuelan situation, profited a total of $nearly half a million from a starting bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Probability Spikes Before Public Statement
Market statistics shows that users estimated the likelihood of Maduro's exit at just under 7% in the afternoon of the Friday before the event.
But the odds had climbed to over 10% by late Friday night and surged in the early hours of January 3rd, pointing to a sharp shift in positions just before the social media post was made.
"This specific wager has all the signs of a trade based on inside information," said Dennis Kelleher.
A small number of other platform users also earned large payouts from predicting the capture.
Legal Questions Grows
Some lawmakers are beginning to pay attention.
A bill introduced on the start of the week aims to prohibit federal workers from making trades on prediction markets if they have "material nonpublic information" related to a bet.
The Prediction Market Landscape
Event-driven betting sites have grown significantly in recent years, with traders able to predict everything from elections to politics.
This sector faced scrutiny under the previous administration. But it has found a more favorable environment during the Trump presidency.
Using confidential knowledge is illegal in the securities markets, but there are less oversight in the prediction market arena.
A company executive for a competing service said their site "strictly forbids insider trading of any form."
