An Forecasting Platform User Made $Nearly Half a Million on Bets Predicting Venezuela's Political Shift.
A bettor profited close to $500,000 on the ouster of the Venezuelan leader just before it was made public, leading to inquiries about whether someone profited from non-public details of the US operation.
Changing Odds in Forecasts
Predictions made on the forecasting site, a blockchain-based service, that the leader would be removed from office by the close of the month rose in the hours before President Donald Trump stated on the weekend that the Venezuelan leader had been seized.
A single trader, which became a member in December and made four bets, all on Venezuela, earned over $nearly half a million from a initial bet of $32,537.
Who placed the bet is a mystery. The anonymous account had only a blockchain identifier for identification.
Probability Spikes Before News Break
Market statistics shows that traders assessed the probability of a political change at just a low 6.5 percent in the late afternoon of the Friday before the event.
But the market's assessment had jumped to eleven percent by the end of the day and skyrocketed in the early hours of Saturday, suggesting a sharp shift in market sentiment immediately prior to the official statement was made.
"This specific wager has all the characteristics of a transaction based on inside information," commented Dennis Kelleher.
Several of other traders also made tens of thousands of dollars from similar wagers.
Political Attention Emerges
Some lawmakers are beginning to pay attention.
A new rule presented on Monday aims to prohibit federal workers from participating on prediction markets if they have "material nonpublic information" related to a bet.
Industry Context
Prediction markets have surged in popularity in the past few years, with traders able to wager on everything from elections to politics.
The industry faced scrutiny under the last presidential term. But it has received a warmer welcome during the present political climate.
Using confidential knowledge is against the law in the traditional financial markets, but there are fewer regulations in the forecasting industry.
A company executive for a competing service said their site "has clear rules against insider trading of any form."
