An Prediction Market Trader Made $Nearly Half a Million from Wagers Predicting Venezuela's Political Shift.
An individual profited close to $500,000 from wagers on the downfall of Venezuela's president immediately preceding it was officially announced, leading to inquiries about the possibility of profiting from confidential information of American actions.
Sudden Shift in Predictions
Bets placed on the crypto-platform, an online prediction market, that the leader would be no longer in control by the close of the month rose in the time leading up to President Donald Trump declared on the weekend that Maduro had been apprehended.
A single trader, which registered on the site recently and made four bets, all on the Venezuelan situation, earned over $nearly half a million from a modest bet of $32,537.
Who placed the bet is a mystery. The anonymous account had only a string of letters and numbers for identification.
Odds Fluctuate Before News Break
Trading information shows that traders estimated the likelihood of the president's removal at just 6.5% in the late afternoon of the Friday before the event.
However the odds had climbed to 11% by late Friday night and spiked dramatically in the morning of Saturday, pointing to a rapid movement in positions just before the official statement was made.
"This specific wager has all the characteristics of a transaction based on confidential knowledge," stated a financial reform advocate.
A small number of other individuals also earned large payouts from similar wagers.
Regulatory Scrutiny Grows
Some lawmakers are starting to take note.
A bill introduced on Monday seeks to ban federal workers from participating on prediction markets if they have "insider details" related to a market.
Market Background
Forecasting platforms have become increasingly popular in the United States, with traders able to wager on everything from elections to political events.
This sector encountered regulatory challenges under the previous administration. But it has found a more favorable environment during the Trump presidency.
Insider trading is illegal in the stock market, but there are more ambiguous rules in the prediction market space.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
