A Prediction Market Participant Profited $436,000 on Wagers Predicting the Ouster of Maduro.
A trader profited close to $500,000 on the ouster of Venezuela's president immediately preceding it was officially announced, raising questions about potential gains made from inside knowledge of American actions.
Sudden Shift in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the end of January rose in the time leading up to Donald Trump declared on January 3rd that Maduro had been apprehended.
One account, which became a member in December and placed four wagers, all on political events in Venezuela, earned over $436,000 from a modest bet of over $32,000.
Who placed the bet is a mystery. The anonymous account had only a blockchain identifier for identification.
Probability Spikes Before Public Statement
Trading information shows that users assessed the probability of the president's removal at just 6.5% in the afternoon of the prior Friday.
However the odds had increased to over 10% by shortly before midnight and skyrocketed in the early hours of January 3rd, suggesting a sharp shift in market sentiment right before the official statement was made.
"That trade has all the characteristics of a transaction based on inside information," commented Dennis Kelleher.
Several of other individuals also profited large payouts from bets on the same outcome.
Regulatory Scrutiny Intensifies
Politicians are starting to take note.
Proposed legislation introduced on recently would prevent public officials from participating on forecasting platforms if they have "confidential government knowledge" related to a wager.
Market Background
Prediction markets have become increasingly popular in recent years, with participants able to predict everything from sports to politics.
The industry faced scrutiny under the previous administration. But it has experienced less resistance during the present political climate.
Trading on insider information is a crime in the securities markets, but there are less oversight in the event betting industry.
An official representative for a competing service said their site "explicitly prohibits such activities of any form."