An Forecasting Platform Trader Profited $436,000 on Wagers Predicting Venezuela's Political Shift.
A trader made nearly half a million dollars on the ouster of the Venezuelan leader immediately preceding it was officially announced, raising questions about the possibility of profiting from inside knowledge of the US operation.
Changing Odds in Predictions
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be out of power by the close of the month rose in the time leading up to Donald Trump stated on Saturday that the president had been taken into custody.
A particular user, which joined the platform in December and placed four wagers, all on Venezuela, earned over $436,000 from a modest bet of over $32,000.
The identity is unknown. This unidentified trader had only a cryptographic address for identification.
Probability Spikes Before News Break
Market statistics shows that traders put the odds of a political change at just 6.5% in the late afternoon of the Friday before the event.
Yet the market's assessment had jumped to eleven percent by late Friday night and skyrocketed in the early hours of Saturday, pointing to a rapid movement in positions immediately prior to the social media post was made.
"This particular bet has all the hallmarks of a trade based on non-public details," said Dennis Kelleher.
A small number of other individuals also made tens of thousands of dollars from similar wagers.
Legal Questions Intensifies
Politicians are growing concerned.
A new rule presented on Monday would prevent government employees from participating on prediction markets if they have "insider details" related to a market.
Market Background
Event-driven betting sites have grown significantly in the past few years, with traders able to bet on everything from sports to political events.
This sector faced scrutiny under the last presidential term. However it has received a warmer welcome during the present political climate.
Trading on insider information is against the law in the securities markets, but there are more ambiguous rules in the prediction market industry.
A company executive for another major platform said their site "explicitly prohibits insider trading of any form."
