An Prediction Market Participant Made $436,000 from Bets on Maduro's Downfall.
An individual made nearly half a million dollars from wagers on the downfall of Nicolás Maduro just before it was made public, sparking debate about whether someone profited from confidential information of American actions.
Changing Odds in Wagers
Wagers on Polymarket, an online prediction market, that the Venezuelan president would be no longer in control by the close of the month rose in the hours before Donald Trump announced on January 3rd that Maduro had been seized.
A single trader, which joined the platform last month and placed four wagers, all on Venezuela, made more than $436K from a starting bet of over $32,000.
The identity is unknown. The user had only a cryptographic address for identification.
Probability Spikes Before Public Statement
Market statistics shows that participants assessed the probability of the president's removal at just 6.5% in the midday period of the Friday before the event.
But the odds had jumped to 11% by shortly before midnight and skyrocketed in the morning of the next day, pointing to a rapid movement in positions just before the public announcement was made.
"This particular bet has all the signs of a bet based on confidential knowledge," said Dennis Kelleher.
A handful of other traders also made large payouts from similar wagers.
Legal Questions Emerges
Politicians are growing concerned.
A new rule presented on Monday would prevent federal workers from making trades on prediction markets if they have "material nonpublic information" related to a bet.
Industry Context
Prediction markets have become increasingly popular in the past few years, with users able to bet on everything from elections to politics.
Prediction markets faced scrutiny under the previous administration. But it has experienced less resistance during the present political climate.
Using confidential knowledge is against the law in the securities markets, but there are less oversight in the forecasting industry.
An official representative for another major platform said their site "strictly forbids trading on insider information of any form."
