An Prediction Market User Earned $436,000 on Wagers Predicting Venezuela's Political Shift.
A bettor made nearly half a million dollars on the ouster of Venezuela's president immediately preceding it was officially announced, raising questions about potential gains made from confidential information of the event.
Sudden Shift in Wagers
Predictions made on the forecasting site, a crypto-powered platform, that Nicolás Maduro would be no longer in control by the close of the month surged in the time leading up to Donald Trump stated on the weekend that the Venezuelan leader had been seized.
A single trader, which registered on the site last month and placed four wagers, all on Venezuela, earned over $436,000 from a initial bet of $32.5K.
Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.
Probability Spikes Before Announcement
Market statistics shows that users assessed the probability of the president's removal at just under 7% in the late afternoon of Friday, January 2nd.
However the market's assessment had jumped to 11% by late Friday night and skyrocketed in the first hours of the next day, indicating a sharp shift in market sentiment right before the social media post was made.
"This specific wager has all the characteristics of a trade based on non-public details," commented a financial reform advocate.
A small number of other individuals also profited tens of thousands of dollars from bets on the same outcome.
Regulatory Scrutiny Grows
Elected officials are beginning to pay attention.
Proposed legislation introduced on the start of the week would prevent government employees from participating on prediction markets if they have "confidential government knowledge" related to a wager.
Market Background
Event-driven betting sites have grown significantly in the United States, with users able to wager on everything from elections to current affairs.
This sector encountered regulatory challenges under the previous administration. However it has received a warmer welcome during the current presidency.
Using confidential knowledge is illegal in the securities markets, but there are more ambiguous rules in the prediction market arena.
An official representative for another major platform said their site "has clear rules against such activities of any form."
