A Forecasting Platform User Made $Nearly Half a Million from Bets Predicting the Ouster of Maduro.
An individual profited close to $500,000 by predicting the removal of Nicolás Maduro shortly prior to it was officially announced, sparking debate about the possibility of profiting from confidential information of the US operation.
Sudden Shift in Predictions
Predictions made on the forecasting site, a blockchain-based service, that Nicolás Maduro would be no longer in control by the end of January increased in the hours before President Donald Trump announced on January 3rd that the president had been taken into custody.
A particular user, which became a member last month and made four bets, all on political events in Venezuela, profited a total of $436K from a starting bet of $32.5K.
The identity is unknown. The anonymous account had only a blockchain identifier for identification.
Odds Fluctuate Before News Break
Trading information shows that users estimated the likelihood of the president's removal at just 6.5% in the afternoon of Friday, January 2nd.
Yet these probabilities had climbed to 11% by shortly before midnight and skyrocketed in the morning of Saturday, suggesting a sharp shift in betting activity just before the official statement was made.
"That trade has all the signs of a trade based on non-public details," commented a financial reform advocate.
A small number of other platform users also profited tens of thousands of dollars from bets on the same outcome.
Regulatory Scrutiny Intensifies
Some lawmakers are beginning to pay attention.
A new rule presented on the start of the week seeks to ban government employees from making trades on forecasting platforms if they have "confidential government knowledge" related to a wager.
Industry Context
Prediction markets have become increasingly popular in recent years, with users able to wager on everything from elections to politics.
The industry faced scrutiny under the previous administration. However it has experienced less resistance during the current presidency.
Using confidential knowledge is illegal in the securities markets, but there are fewer regulations in the prediction market industry.
A spokesperson for a competing service said their site "explicitly prohibits trading on insider information of any form."
