An Prediction Market User Made $Nearly Half a Million on Bets on Venezuela's Political Shift.
An individual earned a substantial sum on the ouster of Venezuela's president shortly prior to it was made public, raising questions about whether someone profited from confidential information of the US operation.
Sudden Shift in Predictions
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 period preceding Donald Trump declared on the weekend that the Venezuelan leader had been apprehended.
A particular user, which registered on the site recently and made four bets, all on the Venezuelan situation, made more than $436K from a starting bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Probability Spikes Before News Break
Trading information shows that participants estimated the likelihood of the president's removal at just a low 6.5 percent in the midday period of Friday, January 2nd.
Yet the odds had jumped to 11% by shortly before midnight and spiked dramatically in the first hours of Saturday, indicating a rapid movement in market sentiment immediately prior to the official statement was made.
"That trade has all the characteristics of a bet based on confidential knowledge," said Dennis Kelleher.
Several of other traders also profited significant sums from bets on the same outcome.
Political Attention Intensifies
Elected officials are growing concerned.
Proposed legislation put forward on recently seeks to ban government employees from participating on prediction markets if they have "insider details" related to a market.
The Prediction Market Landscape
Forecasting platforms have become increasingly popular in the past few years, with participants able to predict everything from sports to current affairs.
The industry faced scrutiny under the Biden administration. But it has experienced less resistance during the Trump presidency.
Trading on insider information is against the law in the stock market, but there are more ambiguous rules in the prediction market arena.
A company executive for another major platform said their site "explicitly prohibits insider trading of any form."
