An Prediction Market Participant Made $436K on Wagers Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars on the ouster of the Venezuelan leader immediately preceding it was publicly declared, leading to inquiries about potential gains made from confidential information of the event.
Market Movement in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that Nicolás Maduro would be no longer in control by the end of January surged in the period preceding Donald Trump stated on the weekend that the Venezuelan leader had been seized.
One account, which became a member recently and placed four wagers, all on 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.
Odds Fluctuate Before Public Statement
Platform data shows that participants assessed the probability of a political change at just under 7% in the midday period of Friday, January 2nd.
However the odds had jumped to 11% by late Friday night and spiked dramatically in the first hours of Saturday, pointing to a sharp shift in betting activity just before the official statement was made.
"This particular bet has all the characteristics of a transaction based on non-public details," stated an industry expert.
A small number of other platform users also made large payouts from similar wagers.
Regulatory Scrutiny Emerges
Some lawmakers are beginning to pay attention.
A bill introduced on the start of the week aims to prohibit public officials from making trades on prediction markets if they have "insider details" related to a market.
Market Background
Forecasting platforms have become increasingly popular in the past few years, with users able to bet on everything from sports to politics.
This sector were examined under the previous administration. But it has received a warmer welcome during the present political climate.
Trading on insider information is against the law in the traditional financial markets, but there are less oversight in the forecasting arena.
A company executive for another major platform said their site "explicitly prohibits trading on insider information of any form."
