An Prediction Market Trader Earned $436,000 from Bets Predicting the Ouster of Maduro.
A bettor made nearly half a million dollars on the ouster of the Venezuelan leader immediately preceding it was officially announced, raising questions about potential gains made from inside knowledge of American actions.
Sudden Shift in Wagers
Bets placed on the crypto-platform, an online prediction market, that the Venezuelan president would be no longer in control by the end of January rose in the period preceding Donald Trump stated on the weekend that the president had been apprehended.
A particular user, which joined the platform recently and made four bets, all on Venezuela, made more than $nearly half a million from a initial bet of $32,537.
The identity is unknown. This unidentified trader had only a string of letters and numbers for identification.
Market Signals Before News Break
Market statistics shows that users assessed the probability of the president's removal at just a low 6.5 percent in the afternoon of the Friday before the event.
Yet the odds had increased to 11% by late Friday night and surged in the first hours of the next day, suggesting a sharp shift in betting activity immediately prior to the public announcement was made.
"That trade has all the hallmarks of a trade based on confidential knowledge," stated Dennis Kelleher.
A handful of other individuals also made significant sums from predicting the capture.
Regulatory Scrutiny Emerges
Some lawmakers are beginning to pay attention.
Proposed legislation put forward on the start of the week seeks to ban public officials from making trades on prediction markets if they have "material nonpublic information" related to a bet.
Market Background
Event-driven betting sites have surged in popularity in the past few years, with users able to bet on everything from sports outcomes to politics.
Prediction markets faced scrutiny under the previous administration. But it has received a warmer welcome during the Trump presidency.
Using confidential knowledge is illegal in the stock market, but there are more ambiguous rules in the prediction market arena.
An official representative for a competing service said their site "strictly forbids trading on insider information of any form."
