An Prediction Market Participant Earned $Nearly Half a Million on Bets Predicting Maduro's Downfall.
An individual made nearly half a million dollars by predicting the removal of the Venezuelan leader just before it was officially announced, sparking debate about whether someone profited from non-public details of American actions.
Market Movement in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be out of power by the close of the month rose in the period preceding President Donald Trump stated on the weekend 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 $436,000 from a initial bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Probability Spikes Before Public Statement
Trading information shows that participants estimated the likelihood of the president's removal at just 6.5% in the midday period of Friday, January 2nd.
Yet these probabilities had increased to 11% by late Friday night and skyrocketed in the early hours of Saturday, suggesting a sharp shift in betting activity right before the public announcement was made.
"This particular bet has all the signs of a trade based on non-public details," commented a financial reform advocate.
A small number of other platform users also earned tens of thousands of dollars from predicting the capture.
Regulatory Scrutiny Grows
Politicians are starting to take note.
A bill presented on recently would prevent public officials from placing bets on prediction markets if they have "insider details" related to a market.
The Prediction Market Landscape
Prediction markets have become increasingly popular in recent years, with users able to wager on everything from elections to politics.
The industry faced scrutiny under the previous administration. But it has experienced less resistance during the Trump presidency.
Trading on insider information is a crime in the securities markets, but there are less oversight in the prediction market arena.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
