A Prediction Market Trader Earned $Nearly Half a Million from Bets Predicting Maduro's Downfall.
A trader 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 event.
Changing Odds in Predictions
Predictions made on the forecasting site, a crypto-powered platform, that Nicolás Maduro would be no longer in control by the close of the month surged in the hours before former President Trump announced on the weekend that Maduro had been seized.
A particular user, which joined the platform in December and placed four wagers, all on Venezuela, profited a total of $436K from a initial bet of $32.5K.
Who placed the bet is a mystery. The user had only a cryptographic address for identification.
Probability Spikes Before Public Statement
Market statistics shows that participants assessed the probability of the president's removal at just 6.5% in the late afternoon of Friday, January 2nd.
But these probabilities had jumped to over 10% by late Friday night and spiked dramatically in the first hours of the next day, suggesting a rapid movement in positions immediately prior to the official statement was made.
"That trade has all the signs of a bet based on inside information," commented a financial reform advocate.
A handful of other traders also profited tens of thousands of dollars from similar wagers.
Legal Questions Emerges
Some lawmakers are growing concerned.
A bill put forward on recently would prevent government employees from participating on forecasting platforms if they have "material nonpublic information" related to a wager.
The Prediction Market Landscape
Forecasting platforms have become increasingly popular in the past few years, with traders able to wager on everything from sports to current affairs.
The industry were examined under the previous administration. But it has experienced less resistance during the current presidency.
Using confidential knowledge is a crime in the traditional financial markets, but there are more ambiguous rules in the prediction market space.
An official representative for a competing service said their site "explicitly prohibits such activities of any form."
