A trader made nearly half a million dollars on the ouster of Nicolás Maduro immediately preceding it was officially announced, sparking debate about potential gains made from non-public details of the event.
Wagers on Polymarket, a blockchain-based service, that the leader would be out of power by the close of the month increased in the period preceding Donald Trump stated on Saturday that Maduro had been taken into custody.
One account, which registered on the site recently and made four bets, all on the Venezuelan situation, profited a total of $436K from a modest bet of over $32,000.
Who placed the bet is a mystery. The anonymous account had only a blockchain identifier for identification.
Trading information shows that participants estimated the likelihood of Maduro's exit at just 6.5% in the afternoon of Friday, January 2nd.
However the market's assessment had jumped to over 10% by late Friday night and skyrocketed in the morning of January 3rd, suggesting a sharp shift in betting activity right before the official statement was made.
"This particular bet has all the signs of a trade based on inside information," said a financial reform advocate.
A small number of other platform users also earned tens of thousands of dollars from bets on the same outcome.
Elected officials are starting to take note.
A new rule presented on Monday aims to prohibit public officials from making trades on prediction markets if they have "insider details" related to a bet.
Event-driven betting sites have surged in popularity in the past few years, with users able to wager on everything from elections to politics.
The industry were examined under the Biden administration. But it has experienced less resistance during the current presidency.
Using confidential knowledge is against the law in the stock market, but there are more ambiguous rules in the prediction market space.
A company executive for another major platform said their site "explicitly prohibits trading on insider information of any form."
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