An Prediction Market User Made $436K from Bets on the Ouster of Maduro.
An individual made nearly half a million dollars from wagers on the downfall of Venezuela's president immediately preceding it was made public, raising questions about the possibility of profiting from confidential information of the event.
Market Movement in Predictions
Wagers on Polymarket, a crypto-powered platform, that the Venezuelan president would be no longer in control by the close of the month increased in the hours before President Donald Trump declared on January 3rd that the Venezuelan leader had been taken into custody.
A single trader, which became a member recently and made four bets, all on Venezuela, made more than $436K from a initial bet of $32,537.
Who placed the bet is a mystery. The user had only a cryptographic address for identification.
Probability Spikes Before Announcement
Trading information shows that users estimated the likelihood of Maduro's exit at just under 7% in the midday period of the Friday before the event.
Yet the market's assessment had climbed to 11% by shortly before midnight and skyrocketed in the morning of January 3rd, indicating a sharp shift in positions just before the social media post was made.
"That trade has all the characteristics of a trade based on inside information," said a financial reform advocate.
A handful of other individuals also earned tens of thousands of dollars from similar wagers.
Political Attention Intensifies
Some lawmakers are beginning to pay attention.
A bill presented on the start of the week seeks to ban government employees from making trades on forecasting platforms if they have "confidential government knowledge" related to a wager.
The Prediction Market Landscape
Prediction markets have become increasingly popular in the past few years, with users able to bet on everything from sports outcomes to current affairs.
The industry encountered regulatory challenges under the last presidential term. However it has received a warmer welcome during the Trump presidency.
Trading on insider information is against the law in the traditional financial markets, but there are fewer regulations in the forecasting arena.
A spokesperson for a competing service said their site "strictly forbids insider trading of any form."
