An Prediction Market Trader Profited $436,000 on Bets Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 on the ouster of the Venezuelan leader shortly prior to it was made public, raising questions about the possibility of profiting from confidential information of American actions.
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 close of the month surged in the time leading up to President Donald Trump announced on the weekend that the Venezuelan leader had been apprehended.
A single trader, which became a member in December and took four positions, all on Venezuela, earned over $436,000 from a starting bet of $32.5K.
The identity is unknown. The anonymous account had only a cryptographic address for identification.
Odds Fluctuate Before Public Statement
Platform data shows that participants assessed the probability of a political change at just under 7% in the midday period of the Friday before the event.
However the market's assessment had jumped to eleven percent by shortly before midnight and spiked dramatically in the morning of Saturday, pointing to a sharp shift in positions right before the official statement was made.
"That trade has all the characteristics of a transaction based on non-public details," said Dennis Kelleher.
Several of other platform users also made large payouts from bets on the same outcome.
Legal Questions Emerges
Politicians are beginning to pay attention.
A bill introduced on Monday seeks to ban public officials from placing bets on forecasting platforms if they have "confidential government knowledge" related to a bet.
Market Background
Forecasting platforms have become increasingly popular in recent years, with participants able to wager on everything from sports outcomes to political events.
The industry were examined under the last presidential term. Yet it has experienced less resistance during the current presidency.
Using confidential knowledge is a crime in the stock market, but there are fewer regulations in the forecasting industry.
An official representative for a competing service said their site "has clear rules against trading on insider information of any form."
