A trader profited close to $500,000 by predicting the removal of the Venezuelan leader just before it was publicly declared, sparking debate about the possibility of profiting from confidential information of American actions.
Predictions made on the forecasting site, a blockchain-based service, that the leader would be no longer in control by the month's conclusion surged in the hours before Donald Trump stated on the weekend that the president had been seized.
One account, which became a member recently and made four bets, all on political events in Venezuela, made more than $436K from a initial bet of $32,537.
Who placed the bet is a mystery. This unidentified trader had only a cryptographic address for identification.
Trading information shows that participants assessed the probability of Maduro's exit at just 6.5% in the late afternoon of the prior Friday.
Yet the odds had climbed to 11% by the end of the day and spiked dramatically in the morning of January 3rd, indicating a rapid movement in betting activity just before the social media post was made.
"This particular bet has all the hallmarks of a trade based on non-public details," commented an industry expert.
Several of other platform users also profited significant sums from bets on the same outcome.
Some lawmakers are growing concerned.
Proposed legislation put forward on recently would prevent public officials from making trades on forecasting platforms if they have "material nonpublic information" related to a market.
Event-driven betting sites have grown significantly in the United States, with participants able to bet on everything from sports outcomes to current affairs.
Prediction markets faced scrutiny under the previous administration. But it has experienced less resistance during the current presidency.
Trading on insider information is illegal in the traditional financial markets, but there are less oversight in the forecasting industry.
An official representative for another major platform said their site "strictly forbids insider trading of any form."
A blockchain researcher and crypto analyst with over 8 years of experience in decentralized finance and emerging technologies.
