An Prediction Market User Profited $436,000 from Bets on Venezuela's Political Shift.
A bettor profited close to $500,000 on the ouster of the Venezuelan leader immediately preceding it was publicly declared, leading to inquiries about the possibility of profiting from inside knowledge of American actions.
Sudden Shift in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the close of the month increased in the hours before Donald Trump declared on the weekend that the Venezuelan leader had been taken into custody.
A single trader, which became a member last month and placed four wagers, all on political events in Venezuela, earned over $436,000 from a initial bet of over $32,000.
The identity is unknown. The anonymous account had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Market statistics shows that traders assessed the probability of the president's removal at just a low 6.5 percent in the afternoon of Friday, January 2nd.
However these probabilities had climbed to over 10% by late Friday night and skyrocketed in the early hours of Saturday, pointing to a sudden change in betting activity right before the public announcement was made.
"This particular bet has all the signs of a trade based on non-public details," commented Dennis Kelleher.
A small number of other traders also made large payouts from similar wagers.
Political Attention Intensifies
Politicians are beginning to pay attention.
A new rule put forward on Monday would prevent federal workers from placing bets on prediction markets if they have "confidential government knowledge" related to a market.
The Prediction Market Landscape
Forecasting platforms have surged in popularity in the past few years, with traders able to predict everything from sports outcomes to politics.
Prediction markets faced scrutiny under the last presidential term. But it has received a warmer welcome during the Trump presidency.
Using confidential knowledge is a crime in the securities markets, but there are fewer regulations in the forecasting space.
A company executive for a competing service said their site "explicitly prohibits such activities of any form."
