An Forecasting Platform User Made $436K on Bets Predicting Maduro's Downfall.
A trader profited close to $500,000 on the ouster of Venezuela's president shortly prior to it was made public, raising questions about the possibility of profiting from inside knowledge of the US operation.
Sudden Shift in Wagers
Wagers on Polymarket, an online prediction market, that the Venezuelan president would be out of power by the end of January rose in the period preceding Donald Trump announced on January 3rd that Maduro had been taken into custody.
One account, which became a member last month and placed four wagers, all on political events in Venezuela, profited a total of $436,000 from a starting bet of $32,537.
Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.
Market Signals Before Announcement
Market statistics shows that users estimated the likelihood of the president's removal at just under 7% in the afternoon of the Friday before the event.
But the market's assessment had increased to eleven percent by the end of the day and skyrocketed in the morning of Saturday, indicating a sharp shift in market sentiment just before the public announcement was made.
"That trade has all the characteristics of a transaction based on non-public details," commented a financial reform advocate.
A handful of other platform users also made tens of thousands of dollars from predicting the capture.
Legal Questions Grows
Elected officials are growing concerned.
A bill put forward on recently seeks to ban public officials from placing bets on prediction markets if they have "confidential government knowledge" related to a bet.
Market Background
Prediction markets have surged in popularity in recent years, with traders able to predict everything from sports to politics.
Prediction markets faced scrutiny under the Biden administration. However it has received a warmer welcome during the current presidency.
Using confidential knowledge is illegal in the securities markets, but there are fewer regulations in the prediction market space.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
