An Forecasting Platform Trader Made $Nearly Half a Million on Bets Predicting Venezuela's Political Shift.
A trader profited close to $500,000 by predicting the removal of Nicolás Maduro immediately preceding it was publicly declared, sparking debate about the possibility of profiting from inside knowledge of American actions.
Sudden Shift in Predictions
Wagers on Polymarket, a blockchain-based service, that the leader would be no longer in control by the close of the month rose in the time leading up to Donald Trump stated on January 3rd that the Venezuelan leader had been taken into custody.
One account, which became a member in December and placed four wagers, all on political events in Venezuela, made more than $436,000 from a starting bet of $32,537.
Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.
Market Signals Before News Break
Market statistics shows that users put the odds of a political change at just 6.5% in the late afternoon of the Friday before the event.
However these probabilities had increased to over 10% by late Friday night and skyrocketed in the morning of the next day, indicating a rapid movement in betting activity immediately prior to the public announcement was made.
"This particular bet has all the signs of a trade based on confidential knowledge," commented a financial reform advocate.
A small number of other individuals also made tens of thousands of dollars from predicting the capture.
Legal Questions Intensifies
Politicians are growing concerned.
A new rule presented on the start of the week seeks to ban federal workers from placing bets on prediction markets if they have "material nonpublic information" related to a bet.
Market Background
Prediction markets have become increasingly popular in the United States, with traders able to bet on everything from sports to current affairs.
The industry faced scrutiny under the previous administration. But it has experienced less resistance during the current presidency.
Trading on insider information is illegal in the securities markets, but there are less oversight in the event betting industry.
A company executive for another major platform said their site "explicitly prohibits such activities of any form."
