A Prediction Market Trader Made $Nearly Half a Million on Wagers on Maduro's Downfall.
A bettor made nearly half a million dollars from wagers on the downfall of Venezuela's president immediately preceding it was publicly declared, leading to inquiries about the possibility of profiting from confidential information of the US operation.
Market Movement in Predictions
Predictions made on the forecasting site, an online prediction market, that the Venezuelan president would be removed from office by the month's conclusion rose in the hours before Donald Trump announced on January 3rd that the Venezuelan leader had been taken into custody.
One account, which registered on the site last month and took four positions, all on Venezuela, profited a total of $436K 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.
Probability Spikes Before Announcement
Trading information shows that traders assessed the probability of the president's removal at just under 7% in the midday period of Friday, January 2nd.
But these probabilities had increased to 11% by the end of the day and skyrocketed in the morning of the next day, pointing to a rapid movement in betting activity just before the social media post was made.
"This particular bet has all the characteristics of a transaction based on confidential knowledge," said an industry expert.
A small number of other platform users also profited large payouts from similar wagers.
Regulatory Scrutiny Intensifies
Politicians are beginning to pay attention.
A new rule introduced on the start of the week would prevent government employees from placing bets on forecasting platforms if they have "confidential government knowledge" related to a bet.
Market Background
Prediction markets have surged in popularity in the past few years, with participants able to bet on everything from elections to politics.
This sector faced scrutiny under the last presidential term. But 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 prediction market space.
A company executive for a competing service said their site "explicitly prohibits trading on insider information of any form."
