An Forecasting Platform Trader Profited $Nearly Half a Million on Bets Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars by predicting the removal of Venezuela's president shortly prior to it was made public, sparking debate about potential gains made from non-public details of the US operation.
Changing Odds in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the end of January surged in the time leading up to former President Trump declared on the weekend that the Venezuelan leader had been taken into custody.
A single trader, which joined the platform in December and placed four wagers, all on political events in Venezuela, earned over $nearly half a million from a modest bet of over $32,000.
Who placed the bet is a mystery. This unidentified trader had only a blockchain identifier for identification.
Market Signals Before News Break
Market statistics shows that users estimated the likelihood of the president's removal at just a low 6.5 percent in the midday period of the Friday before the event.
Yet the market's assessment had jumped to over 10% by late Friday night and surged in the early hours of the next day, indicating a sharp shift in betting activity just before the official statement was made.
"This specific wager has all the hallmarks of a bet based on confidential knowledge," said Dennis Kelleher.
Several of other traders also made tens of thousands of dollars from similar wagers.
Legal Questions Grows
Elected officials are growing concerned.
A bill introduced on recently seeks to ban government employees from participating on prediction markets if they have "insider details" related to a wager.
The Prediction Market Landscape
Prediction markets have grown significantly in the United States, with traders able to bet on everything from elections to current affairs.
Prediction markets were examined under the last presidential term. However it has experienced less resistance during the Trump presidency.
Using confidential knowledge is against the law in the traditional financial markets, but there are less oversight in the prediction market industry.
An official representative for a competing service said their site "explicitly prohibits trading on insider information of any form."