An Prediction Market Participant Earned $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 officially announced, raising questions about whether someone profited from inside knowledge of American actions.
Sudden Shift in Forecasts
Predictions made on the forecasting site, an online prediction market, that Nicolás Maduro would be no longer in control by the month's conclusion surged in the hours before President 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 Venezuela, profited a total of $436,000 from a modest bet of over $32,000.
Who placed the bet is a mystery. This unidentified trader had only a cryptographic address for identification.
Market Signals Before News Break
Market statistics shows that traders estimated the likelihood of the president's removal at just a low 6.5 percent in the midday period of the Friday before the event.
Yet these probabilities had increased to 11% by the end of the day and spiked dramatically in the first hours of Saturday, indicating a rapid movement in betting activity immediately prior to the social media post was made.
"This particular bet has all the signs of a trade based on confidential knowledge," commented Dennis Kelleher.
A handful of other individuals also profited large payouts from similar wagers.
Legal Questions Grows
Some lawmakers are starting to take note.
Proposed legislation presented on Monday aims to prohibit government employees from placing bets on prediction markets if they have "confidential government knowledge" related to a bet.
The Prediction Market Landscape
Event-driven betting sites have grown significantly in the United States, with traders able to wager on everything from sports to political events.
This sector were examined under the last presidential term. However it has found a more favorable environment during the Trump presidency.
Using confidential knowledge is illegal in the traditional financial markets, but there are less oversight in the forecasting arena.
A company executive for another major platform said their site "explicitly prohibits such activities of any form."
