An Prediction Market User Profited $436,000 on Bets Predicting the Ouster of Maduro.
An individual profited close to $500,000 on the ouster of Nicolás Maduro immediately preceding it was publicly declared, sparking debate about potential gains made from non-public details of the event.
Market Movement in Forecasts
Predictions made on the forecasting site, a crypto-powered platform, that the Venezuelan president would be no longer in control by the end of January surged in the hours before Donald Trump declared on Saturday that Maduro had been seized.
A particular user, which became a member recently and took four positions, all on the Venezuelan situation, earned over $436K from a starting bet of $32.5K.
The identity is unknown. The user had only a cryptographic address for identification.
Market Signals Before Public Statement
Market statistics shows that users estimated the likelihood of a political change at just under 7% in the midday period of Friday, January 2nd.
But the odds had climbed to eleven percent by late Friday night and surged in the morning of the next day, suggesting a rapid movement in positions right before the public announcement was made.
"That trade has all the hallmarks of a trade based on inside information," said a financial reform advocate.
Several of other traders also profited significant sums from bets on the same outcome.
Political Attention Grows
Elected officials are growing concerned.
Proposed legislation presented on recently would prevent federal workers from making trades on forecasting platforms if they have "confidential government knowledge" related to a wager.
Market Background
Forecasting platforms have grown significantly in recent years, with users able to wager on everything from sports outcomes to current affairs.
Prediction markets were examined under the previous administration. However it has received a warmer welcome during the current presidency.
Trading on insider information is illegal in the securities markets, but there are fewer regulations in the forecasting arena.
A spokesperson for a competing service said their site "strictly forbids insider trading of any form."
