An Prediction Market User Profited $436K on Wagers Predicting Maduro's Downfall.
An individual made nearly half a million dollars on the ouster of Venezuela's president immediately preceding it was made public, sparking debate about potential gains made from confidential information of the US operation.
Market Movement in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that the leader would be out of power by the close of the month rose in the hours before President Donald Trump announced on January 3rd that Maduro had been taken into custody.
A particular user, which became a member recently and placed four wagers, all on Venezuela, made more than $nearly half a million from a starting bet of over $32,000.
The identity is unknown. The anonymous account had only a cryptographic address for identification.
Odds Fluctuate Before News Break
Trading information shows that traders estimated the likelihood of a political change at just 6.5% in the afternoon of the prior Friday.
However these probabilities had climbed to eleven percent by late Friday night and skyrocketed in the first hours of Saturday, indicating a sudden change in positions immediately prior to the official statement was made.
"This specific wager has all the hallmarks of a trade based on non-public details," commented a financial reform advocate.
A small number of other traders also profited tens of thousands of dollars from similar wagers.
Political Attention Intensifies
Some lawmakers are beginning to pay attention.
Proposed legislation presented on recently aims to prohibit public officials from placing bets on prediction markets if they have "material nonpublic information" related to a bet.
Industry Context
Forecasting platforms have grown significantly in the past few years, with users able to bet on everything from sports to politics.
The industry encountered regulatory challenges under the previous administration. Yet it has experienced less resistance during the present political climate.
Using confidential knowledge is a crime in the securities markets, but there are more ambiguous rules in the prediction market arena.
A company executive for another major platform said their site "has clear rules against trading on insider information of any form."
