An Prediction Market Trader Profited $436K on Bets Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 from wagers on the downfall of Venezuela's president shortly prior to it was officially announced, sparking debate about whether someone profited from non-public details of the event.
Changing Odds in Forecasts
Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be no longer in control by the end of January rose in the time leading up to President Donald Trump stated on Saturday that the president had been seized.
A particular user, which registered on the site recently and placed four wagers, all on Venezuela, profited a total of $nearly half a million from a starting bet of $32,537.
It remains unclear. The anonymous account had only a cryptographic address for identification.
Probability Spikes Before Announcement
Trading information shows that users assessed the probability of a political change at just under 7% in the midday period of the Friday before the event.
Yet these probabilities had jumped to 11% by late Friday night and surged in the first hours of January 3rd, pointing to a sharp shift in betting activity immediately prior to the social media post was made.
"That trade has all the characteristics of a trade based on non-public details," commented Dennis Kelleher.
A small number of other individuals also made significant sums from predicting the capture.
Political Attention Emerges
Some lawmakers are starting to take note.
A new rule put forward on Monday would prevent public officials from making trades on forecasting platforms if they have "insider details" related to a bet.
Market Background
Event-driven betting sites have grown significantly in recent years, with traders able to wager on everything from sports outcomes to politics.
Prediction markets faced scrutiny under the previous administration. Yet it has experienced less resistance during the Trump presidency.
Using confidential knowledge is a crime in the traditional financial markets, but there are fewer regulations in the prediction market arena.
An official representative for another major platform said their site "has clear rules against such activities of any form."
