A Forecasting Platform Participant Made $Nearly Half a Million from Bets Predicting Venezuela's Political Shift.
A bettor earned a substantial sum on the ouster of Venezuela's president just before it was made public, leading to inquiries about the possibility of profiting from confidential information of the event.
Sudden Shift in Forecasts
Bets placed on the crypto-platform, an online prediction market, that the Venezuelan president would be removed from office by the close of the month surged in the period preceding Donald Trump announced on January 3rd that the Venezuelan leader had been seized.
A single trader, which registered on the site last month and made four bets, all on the Venezuelan situation, made more than $436,000 from a initial bet of $32.5K.
Who placed the bet is a mystery. The user had only a string of letters and numbers for identification.
Probability Spikes Before Public Statement
Trading information shows that users put the odds of Maduro's exit at just a low 6.5 percent in the late afternoon of the Friday before the event.
However these probabilities had climbed to over 10% by the end of the day and skyrocketed in the first hours of the next day, indicating a sharp shift in betting activity just before the official statement was made.
"This specific wager has all the characteristics of a bet based on confidential knowledge," said a financial reform advocate.
A handful of other traders also profited significant sums from bets on the same outcome.
Regulatory Scrutiny Grows
Politicians are growing concerned.
A new rule presented on recently seeks to ban federal workers from placing bets on forecasting platforms if they have "material nonpublic information" related to a wager.
Industry Context
Event-driven betting sites have surged in popularity in the past few years, with participants able to predict everything from elections to politics.
This sector faced scrutiny under the previous administration. Yet it has received a warmer welcome during the present political climate.
Insider trading is illegal in the stock market, but there are fewer regulations in the forecasting arena.
A spokesperson for another major platform said their site "strictly forbids such activities of any form."
