An Prediction Market User Made $436,000 on Wagers Predicting Venezuela's Political Shift.
An individual made nearly half a million dollars by predicting the removal of Venezuela's president immediately preceding it was publicly declared, raising questions about potential gains made from non-public details of the US operation.
Market Movement in Forecasts
Bets placed on the crypto-platform, an online prediction market, that Nicolás Maduro would be removed from office by the end of January rose in the period preceding former President Trump declared on the weekend that Maduro had been apprehended.
A particular user, which became a member in December and made four bets, all on political events in Venezuela, earned over $436,000 from a initial bet of $32,537.
Who placed the bet is a mystery. The user had only a blockchain identifier for identification.
Market Signals Before Public Statement
Trading information shows that traders assessed the probability of a political change at just under 7% in the late afternoon of the Friday before the event.
However these probabilities had climbed to over 10% by shortly before midnight and skyrocketed in the morning of Saturday, pointing to a sudden change in market sentiment immediately prior to the public announcement was made.
"This specific wager has all the characteristics of a trade based on inside information," stated an industry expert.
A handful of other traders also earned tens of thousands of dollars from similar wagers.
Regulatory Scrutiny Grows
Elected officials are beginning to pay attention.
Proposed legislation presented on Monday aims to prohibit public officials from placing bets on prediction markets if they have "material nonpublic information" related to a market.
The Prediction Market Landscape
Forecasting platforms have become increasingly popular in recent years, with traders able to bet on everything from sports to political events.
The industry faced scrutiny under the previous administration. However it has found a more favorable environment during the Trump presidency.
Insider trading is illegal in the securities markets, but there are fewer regulations in the forecasting space.
A spokesperson for another major platform said their site "has clear rules against insider trading of any form."
