An Prediction Market User Earned $436K from Bets Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 from wagers on the downfall of Nicolás Maduro shortly prior to it was officially announced, raising questions about whether someone profited from confidential information of the event.
Changing Odds in Wagers
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be removed from office by the month's conclusion surged in the hours before Donald Trump stated on Saturday that the Venezuelan leader had been taken into custody.
One account, which registered on the site last month and took four positions, all on political events in Venezuela, made more than $nearly half a million from a starting bet of $32,537.
The identity is unknown. This unidentified trader had only a cryptographic address for identification.
Probability Spikes Before Announcement
Trading information shows that participants assessed the probability of Maduro's exit at just under 7% in the late afternoon of the prior Friday.
Yet these probabilities had increased to 11% by the end of the day and surged in the morning of the next day, indicating a sudden change in betting activity right before the public announcement was made.
"This particular bet has all the characteristics of a trade based on inside information," stated an industry expert.
A small number of other individuals also made significant sums from similar wagers.
Legal Questions Emerges
Politicians are growing concerned.
A bill introduced on recently would prevent government employees from making trades on prediction markets if they have "insider details" related to a bet.
Industry Context
Event-driven betting sites have grown significantly in the past few years, with traders able to bet on everything from sports to political events.
The industry were examined under the previous administration. Yet it has found a more favorable environment during the current presidency.
Using confidential knowledge is illegal in the traditional financial markets, but there are less oversight in the prediction market space.
An official representative for another major platform said their site "strictly forbids insider trading of any form."
