A Prediction Market User Profited $Nearly Half a Million from Wagers on Venezuela's Political Shift.
An individual earned a substantial sum on the ouster of Venezuela's president immediately preceding it was publicly declared, raising questions about the possibility of profiting from confidential information of the event.
Sudden Shift in Predictions
Predictions made on the forecasting site, an online prediction market, that Nicolás Maduro would be no longer in control by the close of the month rose in the hours before former President Trump declared on January 3rd that Maduro had been seized.
A single trader, which joined the platform recently and placed four wagers, all on political events in Venezuela, profited a total of $436K from a starting bet of $32.5K.
Who placed the bet is a mystery. The anonymous account had only a blockchain identifier for identification.
Market Signals Before Announcement
Trading information shows that users put the odds of Maduro's exit at just a low 6.5 percent in the afternoon of Friday, January 2nd.
But the market's assessment had climbed to over 10% by the end of the day and spiked dramatically in the morning of Saturday, pointing to a sharp shift in betting activity just before the public announcement was made.
"That trade has all the signs of a trade based on inside information," stated Dennis Kelleher.
A handful of other traders also earned large payouts from similar wagers.
Regulatory Scrutiny Intensifies
Some lawmakers are growing concerned.
A bill introduced on recently would prevent public officials from making trades on forecasting platforms if they have "material nonpublic information" related to a market.
Market Background
Prediction markets have grown significantly in recent years, with participants able to wager on everything from sports to political events.
Prediction markets were examined under the previous administration. But it has experienced less resistance during the present political climate.
Trading on insider information is a crime in the securities markets, but there are less oversight in the forecasting industry.
A company executive for a competing service said their site "has clear rules against such activities of any form."