An Forecasting Platform Participant Earned $436,000 on Bets Predicting Venezuela's Political Shift.
A trader earned a substantial sum by predicting the removal of Venezuela's president just before it was publicly declared, raising questions about whether someone profited from non-public details of American actions.
Sudden Shift in Forecasts
Predictions made on the forecasting site, an online prediction market, that the leader would be no longer in control by the close of the month surged in the period preceding Donald Trump declared on the weekend that the Venezuelan leader had been apprehended.
A particular user, which joined the platform recently and made four bets, all on political events in Venezuela, profited a total of $436K from a starting bet of $32.5K.
Who placed the bet is a mystery. The anonymous account had only a string of letters and numbers for identification.
Probability Spikes Before News Break
Trading information shows that traders estimated the likelihood of Maduro's exit at just a low 6.5 percent in the midday period of the Friday before the event.
But these probabilities had climbed to 11% by the end of the day and spiked dramatically in the morning of Saturday, indicating a rapid movement in positions immediately prior to the official statement was made.
"This specific wager has all the signs of a transaction based on non-public details," stated a financial reform advocate.
A handful of other traders also profited significant sums from predicting the capture.
Political Attention Emerges
Politicians are beginning to pay attention.
A new rule introduced on Monday would prevent federal workers from placing bets on prediction markets if they have "confidential government knowledge" related to a bet.
Industry Context
Forecasting platforms have become increasingly popular in the past few years, with participants able to wager on everything from elections to political events.
Prediction markets were examined under the last presidential term. However it has experienced less resistance during the current presidency.
Trading on insider information is a crime in the stock market, but there are more ambiguous rules in the prediction market industry.
A spokesperson for a competing service said their site "has clear rules against trading on insider information of any form."
