A Prediction Market Trader Made $436,000 from Wagers Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 by predicting the removal of Venezuela's president just before it was made public, raising questions about whether someone profited from inside knowledge of the event.
Changing Odds in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the leader would be no longer in control by the close of the month surged in the period preceding Donald Trump announced on January 3rd that the president had been seized.
One account, which became a member in December and placed four wagers, 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 string of letters and numbers for identification.
Odds Fluctuate Before Announcement
Market statistics shows that traders assessed the probability of the president's removal at just under 7% in the late afternoon of Friday, January 2nd.
However the market's assessment had jumped to eleven percent by the end of the day and spiked dramatically in the early hours of January 3rd, pointing to a sharp shift in positions right before the official statement was made.
"That trade has all the characteristics of a bet based on non-public details," commented an industry expert.
A handful of other traders also profited tens of thousands of dollars from predicting the capture.
Political Attention Grows
Politicians are beginning to pay attention.
A bill presented on Monday aims to prohibit federal workers from placing bets on prediction markets if they have "material nonpublic information" related to a bet.
The Prediction Market Landscape
Event-driven betting sites have grown significantly in the past few years, with users able to wager on everything from sports outcomes to politics.
Prediction markets encountered regulatory challenges under the previous administration. Yet it has experienced less resistance during the Trump presidency.
Insider trading is against the law in the stock market, but there are fewer regulations in the forecasting space.
A spokesperson for another major platform said their site "explicitly prohibits such activities of any form."
