A Forecasting Platform User Made $436K on Bets Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars by predicting the removal of the Venezuelan leader just before it was made public, leading to inquiries about whether someone profited from non-public details of American actions.
Sudden Shift in Wagers
Predictions made on the forecasting site, a blockchain-based service, that the Venezuelan president would be removed from office by the end of January rose in the time leading up to Donald Trump declared on the weekend that the president had been apprehended.
A single trader, which registered on the site in December and took four positions, all on Venezuela, profited a total of $436,000 from a initial bet of over $32,000.
Who placed the bet is a mystery. The user had only a cryptographic address for identification.
Market Signals Before Public Statement
Trading information shows that users estimated the likelihood of Maduro's exit at just a low 6.5 percent in the late afternoon of Friday, January 2nd.
But the market's assessment had climbed to 11% by late Friday night and spiked dramatically in the first hours of the next day, suggesting a sharp shift in market sentiment just before the public announcement was made.
"That trade has all the characteristics of a transaction based on non-public details," stated a financial reform advocate.
A small number of other traders also made significant sums from similar wagers.
Legal Questions Intensifies
Elected officials are growing concerned.
A new rule presented on Monday would prevent federal workers from participating on forecasting platforms if they have "insider details" related to a market.
The Prediction Market Landscape
Prediction markets have grown significantly in the past few years, with traders able to wager on everything from sports outcomes to current affairs.
Prediction markets faced scrutiny under the previous administration. However it has found a more favorable environment during the present political climate.
Using confidential knowledge is illegal in the stock market, but there are less oversight in the forecasting arena.
A spokesperson for another major platform said their site "has clear rules against trading on insider information of any form."
