A Prediction Market User Made $Nearly Half a Million on Bets Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 by predicting the removal of Nicolás Maduro immediately preceding it was made public, raising questions about potential gains made from non-public details of the event.
Sudden Shift in Wagers
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be out of power by the end of January surged in the time leading up to former President Trump declared on the weekend that the president had been seized.
A particular user, which registered on the site in December and placed four wagers, all on the Venezuelan situation, profited a total of $nearly half a million from a starting bet of over $32,000.
It remains unclear. The anonymous account had only a blockchain identifier for identification.
Odds Fluctuate Before Announcement
Platform data shows that users assessed the probability of a political change at just a low 6.5 percent in the late afternoon of the Friday before the event.
But the odds had climbed to 11% by shortly before midnight and skyrocketed in the morning of the next day, pointing to a sudden change in betting activity just before the public announcement was made.
"This specific wager has all the hallmarks of a transaction based on inside information," commented an industry expert.
A small number of other platform users also profited tens of thousands of dollars from bets on the same outcome.
Legal Questions Grows
Politicians are starting to take note.
Proposed legislation presented on Monday would prevent federal workers from participating on prediction markets if they have "material nonpublic information" related to a market.
Industry Context
Prediction markets have become increasingly popular in the past few years, with traders able to bet on everything from elections to political events.
This sector encountered regulatory challenges under the last presidential term. However it has found a more favorable environment during the present political climate.
Trading on insider information is a crime in the stock market, but there are less oversight in the event betting industry.
A spokesperson for a competing service said their site "explicitly prohibits insider trading of any form."
