A Prediction Market User Made $Nearly Half a Million on Wagers on the Ouster of Maduro.
A bettor earned a substantial sum from wagers on the downfall of the Venezuelan leader immediately preceding it was made public, sparking debate about the possibility of profiting from confidential information of the event.
Market Movement in Wagers
Predictions made on the forecasting site, an online prediction market, that the leader would be no longer in control by the end of January increased in the period preceding President Donald Trump announced on the weekend that the president had been taken into custody.
A particular user, which joined the platform in December and took four positions, all on Venezuela, profited a total of $436K from a modest bet of $32.5K.
The identity is unknown. This unidentified trader had only a blockchain identifier for identification.
Probability Spikes Before Public Statement
Trading information shows that traders put the odds of the president's removal at just 6.5% in the midday period of Friday, January 2nd.
Yet the market's assessment had increased to 11% by shortly before midnight and skyrocketed in the morning of January 3rd, suggesting a sharp shift in market sentiment just before the social media post was made.
"This particular bet has all the signs of a transaction based on confidential knowledge," said a financial reform advocate.
A handful of other traders also made tens of thousands of dollars from similar wagers.
Political Attention Intensifies
Elected officials are starting to take note.
A new rule presented on Monday aims to prohibit government employees from participating on prediction markets if they have "material nonpublic information" related to a bet.
Market Background
Prediction markets have surged in popularity in the past few years, with participants able to predict everything from elections to current affairs.
The industry were examined under the previous administration. However it has received a warmer welcome during the Trump presidency.
Trading on insider information is a crime in the traditional financial markets, but there are less oversight in the prediction market space.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
