A Prediction Market Trader Made $436K on Bets on Venezuela's Political Shift.
A bettor earned a substantial sum by predicting the removal of Venezuela's president immediately preceding it was made public, leading to inquiries about the possibility of profiting from non-public details of the US operation.
Sudden Shift in Predictions
Predictions made on the forecasting site, an online prediction market, that the Venezuelan president would be removed from office by the end of January surged in the hours before Donald Trump declared on January 3rd that the Venezuelan leader had been taken into custody.
One account, which registered on the site in December and made four bets, all on political events in Venezuela, profited a total of $436,000 from a starting bet of $32,537.
The identity is unknown. The user had only a cryptographic address for identification.
Odds Fluctuate Before Announcement
Trading information shows that participants assessed the probability of the president's removal at just under 7% in the afternoon of the Friday before the event.
However these probabilities had climbed to eleven percent by late Friday night and surged in the first hours of Saturday, pointing to a sudden change in betting activity just before the social media post was made.
"That trade has all the signs of a bet based on non-public details," said an industry expert.
A small number of other traders also profited large payouts from bets on the same outcome.
Political Attention Emerges
Elected officials are starting to take note.
A bill introduced on the start of the week would prevent public officials from participating on forecasting platforms if they have "material nonpublic information" related to a wager.
The Prediction Market Landscape
Forecasting platforms have surged in popularity in the past few years, with users able to predict everything from elections to politics.
The industry faced scrutiny under the previous administration. But it has found a more favorable environment during the Trump presidency.
Insider trading is against the law in the securities markets, but there are fewer regulations in the forecasting arena.
An official representative for another major platform said their site "strictly forbids trading on insider information of any form."
