A Prediction Market Trader Made $Nearly Half a Million on Bets Predicting the Ouster of Maduro.
A trader profited close to $500,000 by predicting the removal of Nicolás Maduro shortly prior to it was publicly declared, raising questions about whether someone profited from inside knowledge of the event.
Sudden Shift in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the end of January increased in the time leading up to Donald Trump declared on the weekend that the president had been seized.
One account, which became a member last month and made four bets, all on the Venezuelan situation, made more than $nearly half a million from a initial bet of over $32,000.
Who placed the bet is a mystery. The user had only a blockchain identifier for identification.
Odds Fluctuate Before News Break
Market statistics shows that traders estimated the likelihood of Maduro's exit at just a low 6.5 percent in the afternoon of the prior Friday.
Yet the market's assessment had increased to over 10% by shortly before midnight and surged in the morning of Saturday, indicating a sudden change in betting activity just before the public announcement was made.
"This specific wager has all the characteristics of a trade based on inside information," stated Dennis Kelleher.
A small number of other traders also earned large payouts from predicting the capture.
Regulatory Scrutiny Grows
Some lawmakers are growing concerned.
Proposed legislation presented on the start of the week would prevent public officials from participating on forecasting platforms if they have "confidential government knowledge" related to a bet.
Industry Context
Prediction markets have grown significantly in the past few years, with traders able to predict everything from elections to politics.
This sector were examined under the last presidential term. Yet it has experienced less resistance during the current presidency.
Insider trading is against the law in the traditional financial markets, but there are less oversight in the prediction market arena.
A spokesperson for a competing service said their site "explicitly prohibits trading on insider information of any form."