A Forecasting Platform Trader Made $Nearly Half a Million on Bets Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars from wagers on the downfall of the Venezuelan leader just before it was made public, leading to inquiries about the possibility of profiting from inside knowledge of the US operation.
Sudden Shift in Predictions
Predictions made on the forecasting site, an online prediction market, that the leader would be out of power by the month's conclusion rose in the time leading up to President Donald Trump stated on January 3rd that Maduro had been seized.
A particular user, which joined the platform last month and made four bets, all on Venezuela, earned over $nearly half a million from a modest bet of $32,537.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Odds Fluctuate Before News Break
Market statistics shows that participants assessed the probability of Maduro's exit at just a low 6.5 percent in the midday period of Friday, January 2nd.
But these probabilities had jumped to over 10% by the end of the day and surged in the first hours of the next day, suggesting a sudden change in betting activity right before the public announcement was made.
"That trade has all the signs of a transaction based on inside information," commented a financial reform advocate.
Several of other platform users also earned tens of thousands of dollars from similar wagers.
Regulatory Scrutiny Intensifies
Politicians are beginning to pay attention.
A bill introduced on Monday aims to prohibit federal workers from participating on forecasting platforms if they have "material nonpublic information" related to a market.
Market Background
Forecasting platforms have grown significantly in recent years, with participants able to wager on everything from elections to political events.
The industry faced scrutiny under the previous administration. But it has experienced less resistance during the present political climate.
Trading on insider information is a crime in the securities markets, but there are less oversight in the prediction market space.
A company executive for a competing service said their site "explicitly prohibits trading on insider information of any form."
