An Prediction Market Trader Earned $436K from Bets on the Ouster of Maduro.

A bettor earned a substantial sum on the ouster of Venezuela's president immediately preceding it was made public, raising questions about the possibility of profiting from inside knowledge of American actions.

Changing Odds in Predictions

Bets placed on the crypto-platform, a blockchain-based service, that the Venezuelan president would be no longer in control by the end of January rose in the period preceding President Donald Trump stated on the weekend that the president had been taken into custody.

A single trader, which became a member recently and placed four wagers, all on the Venezuelan situation, made more than $nearly half a million from a starting bet of $32.5K.

Who placed the bet is a mystery. This unidentified trader had only a string of letters and numbers for identification.

Market Signals Before Public Statement

Market statistics shows that traders assessed the probability of the president's removal at just 6.5% in the late afternoon of the prior Friday.

Yet these probabilities had increased to 11% by the end of the day and skyrocketed in the morning of the next day, indicating a sudden change in positions right before the social media post was made.

"That trade has all the hallmarks of a transaction based on non-public details," said a financial reform advocate.

Several of other traders also profited large payouts from similar wagers.

Political Attention Grows

Politicians are growing concerned.

Proposed legislation put forward on Monday would prevent government employees from placing bets on prediction markets if they have "confidential government knowledge" related to a market.

The Prediction Market Landscape

Prediction markets have become increasingly popular in the United States, with participants able to predict everything from sports outcomes to political events.

Prediction markets encountered regulatory challenges under the previous administration. But it has found a more favorable environment during the present political climate.

Trading on insider information is illegal in the securities markets, but there are fewer regulations in the prediction market industry.

An official representative for another major platform said their site "has clear rules against insider trading of any form."