A Prediction Market Trader Made $436,000 from Bets on Maduro's Downfall.
A trader profited close to $500,000 on the ouster of Venezuela's president immediately preceding it was officially announced, sparking debate about potential gains made from inside knowledge of the event.
Market Movement in Forecasts
Predictions made on the forecasting site, a blockchain-based service, that the Venezuelan president would be out of power by the close of the month increased in the period preceding former President Trump declared on Saturday that the president had been taken into custody.
A single trader, which became a member last month and took four positions, all on Venezuela, earned over $436K from a modest bet of $32,537.
The identity is unknown. The user had only a string of letters and numbers for identification.
Market Signals Before News Break
Platform data shows that users put the odds of Maduro's exit at just a low 6.5 percent in the afternoon of Friday, January 2nd.
However the odds had jumped to 11% by late Friday night and spiked dramatically in the morning of the next day, pointing to a sudden change in market sentiment immediately prior to the official statement was made.
"This particular bet has all the hallmarks of a trade based on non-public details," stated Dennis Kelleher.
A small number of other individuals also made large payouts from bets on the same outcome.
Regulatory Scrutiny Grows
Politicians are starting to take note.
A new rule put forward on the start of the week would prevent federal workers from making trades on prediction markets if they have "confidential government knowledge" related to a market.
The Prediction Market Landscape
Event-driven betting sites have grown significantly in recent years, with traders able to wager on everything from sports to politics.
This sector faced scrutiny under the Biden 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 more ambiguous rules in the prediction market space.
A company executive for a competing service said their site "strictly forbids such activities of any form."
