An Forecasting Platform Trader Earned $436K on Wagers on Maduro's Downfall.
A trader profited close to $500,000 on the ouster of Nicolás Maduro shortly prior to it was officially announced, raising questions about potential gains made from inside knowledge of the US operation.
Sudden Shift in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that Nicolás Maduro would be no longer in control by the close of the month increased in the time leading up to Donald Trump announced on January 3rd that the president had been seized.
A single trader, which became a member last month and took four positions, all on political events in Venezuela, made more than $436K from a modest bet of $32,537.
Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Platform data shows that participants 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.
But the market's assessment had climbed to 11% by the end of the day and skyrocketed in the morning of the next day, indicating a sharp shift in positions just before the public announcement was made.
"This particular bet has all the signs of a transaction based on inside information," commented an industry expert.
Several of other platform users also earned large payouts from similar wagers.
Regulatory Scrutiny Emerges
Elected officials are starting to take note.
A bill introduced on Monday seeks to ban government employees from making trades on prediction markets if they have "confidential government knowledge" related to a market.
Industry Context
Event-driven betting sites have surged in popularity in the past few years, with traders able to predict everything from sports outcomes to current affairs.
Prediction markets were examined under the previous administration. Yet it has received a warmer welcome during the present political climate.
Using confidential knowledge is a crime in the securities markets, but there are less oversight in the event betting space.
A spokesperson for a competing service said their site "strictly forbids insider trading of any form."
