An Forecasting Platform Trader Earned $Nearly Half a Million on Wagers on the Ouster of Maduro.
A bettor earned a substantial sum on the ouster of Venezuela's president shortly prior to it was made public, raising questions about the possibility of profiting from non-public details of the US operation.
Market Movement in Wagers
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the month's conclusion surged in the time leading up to Donald Trump announced on Saturday that the Venezuelan leader had been seized.
A single trader, which joined the platform last month and made four bets, all on the Venezuelan situation, profited a total of $nearly half a million from a starting bet of over $32,000.
The identity is unknown. The user had only a string of letters and numbers for identification.
Probability Spikes Before Announcement
Market statistics shows that users estimated the likelihood of a political change at just under 7% in the late afternoon of Friday, January 2nd.
However the odds had increased to eleven percent by the end of the day and surged in the early hours of Saturday, indicating a rapid movement in positions just before the official statement was made.
"That trade has all the signs of a trade based on inside information," said Dennis Kelleher.
A small number of other platform users also profited tens of thousands of dollars from similar wagers.
Legal Questions Grows
Politicians are beginning to pay attention.
Proposed legislation presented on the start of the week would prevent government employees from participating on forecasting platforms if they have "insider details" related to a wager.
The Prediction Market Landscape
Forecasting platforms have become increasingly popular in the past few years, with users able to wager on everything from sports outcomes to current affairs.
The industry encountered regulatory challenges under the previous administration. But it has found a more favorable environment during the Trump presidency.
Using confidential knowledge is illegal in the traditional financial markets, but there are more ambiguous rules in the prediction market arena.
An official representative for a competing service said their site "has clear rules against trading on insider information of any form."