A Prediction Market Trader Profited $436,000 on Bets on Venezuela's Political Shift.
An individual profited close to $500,000 on the ouster of Venezuela's president just before it was made public, raising questions about the possibility of profiting from inside knowledge of the US operation.
Market Movement in Forecasts
Predictions made on the forecasting site, an online prediction market, that Nicolás Maduro would be out of power by the end of January rose in the period preceding Donald Trump declared on Saturday that the Venezuelan leader had been taken into custody.
A single trader, which registered on the site in December and took four positions, all on the Venezuelan situation, profited a total of $436,000 from a initial bet of $32.5K.
The identity is unknown. This unidentified trader had only a string of letters and numbers for identification.
Market Signals Before News Break
Market statistics shows that participants put the odds of Maduro's exit at just a low 6.5 percent in the afternoon of the Friday before the event.
However the market's assessment had increased to eleven percent by shortly before midnight and surged in the early hours of Saturday, suggesting a sudden change in market sentiment right before the official statement was made.
"This specific wager has all the characteristics of a bet based on confidential knowledge," commented an industry expert.
Several of other platform users also profited large payouts from similar wagers.
Legal Questions Emerges
Elected officials are beginning to pay attention.
Proposed legislation introduced on Monday seeks to ban federal workers from participating on forecasting platforms if they have "insider details" related to a market.
The Prediction Market Landscape
Forecasting platforms have surged in popularity in the United States, with users able to predict everything from sports to politics.
Prediction markets faced scrutiny under the previous administration. However it has received a warmer welcome during the Trump presidency.
Insider trading is against the law in the securities markets, but there are fewer regulations in the forecasting space.
A spokesperson for a competing service said their site "strictly forbids trading on insider information of any form."
