An Prediction Market Trader Profited $Nearly Half a Million from Wagers on Maduro's Downfall.
An individual profited close to $500,000 from wagers on the downfall of Nicolás Maduro immediately preceding it was officially announced, sparking debate about whether someone profited from confidential information of the event.
Market Movement in Forecasts
Predictions made on the forecasting site, a crypto-powered platform, that Nicolás Maduro would be no longer in control by the end of January surged in the hours before President Donald Trump declared on January 3rd that the Venezuelan leader had been seized.
A single trader, which registered on the site recently and took four positions, all on political events in Venezuela, made more than $436K from a starting bet of $32.5K.
The identity is unknown. The user had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Trading information shows that participants estimated the likelihood of the president's removal at just under 7% in the midday period of Friday, January 2nd.
However these probabilities had increased to over 10% by shortly before midnight and spiked dramatically in the morning of Saturday, suggesting a sharp shift in positions just before the social media post was made.
"That trade has all the signs of a trade based on non-public details," said an industry expert.
Several of other traders also earned tens of thousands of dollars from predicting the capture.
Political Attention Emerges
Politicians are beginning to pay attention.
Proposed legislation presented on the start of the week aims to prohibit public officials from placing bets on prediction markets if they have "insider details" related to a bet.
Market Background
Event-driven betting sites have become increasingly popular in the past few years, with participants able to wager on everything from elections to politics.
The industry were examined under the previous administration. But it has received a warmer welcome during the current presidency.
Trading on insider information is a crime in the traditional financial markets, but there are fewer regulations in the prediction market arena.
An official representative for another major platform said their site "explicitly prohibits such activities of any form."
