A Prediction Market User Earned $Nearly Half a Million from Bets Predicting Maduro's Downfall.

A trader made nearly half a million dollars on the ouster of the Venezuelan leader just before it was made public, sparking debate about potential gains made from non-public details of American actions.

Market Movement in Predictions

Predictions made on the forecasting site, a blockchain-based service, that Nicolás Maduro would be removed from office by the end of January rose in the time leading up to Donald Trump declared on the weekend that the president had been seized.

One account, which became a member last month and placed four wagers, all on Venezuela, profited a total of $nearly half a million from a starting bet of $32.5K.

The identity is unknown. The anonymous account had only a string of letters and numbers for identification.

Market Signals Before Announcement

Trading information shows that participants estimated the likelihood of Maduro's exit at just 6.5% in the late afternoon of the prior Friday.

Yet these probabilities had climbed to over 10% by shortly before midnight and skyrocketed in the early hours of the next day, indicating a rapid movement in positions just before the public announcement was made.

"This specific wager has all the characteristics of a transaction based on confidential knowledge," said Dennis Kelleher.

A handful of other traders also made large payouts from similar wagers.

Legal Questions Intensifies

Elected officials are starting to take note.

A bill presented on Monday aims to prohibit public officials from participating on forecasting platforms if they have "material nonpublic information" related to a market.

The Prediction Market Landscape

Forecasting platforms have become increasingly popular in the past few years, with traders able to wager on everything from elections to politics.

This sector faced scrutiny under the previous administration. However it has found a more favorable environment during the present political climate.

Using confidential knowledge is against the law in the securities markets, but there are more ambiguous rules in the forecasting space.

A company executive for a competing service said their site "strictly forbids trading on insider information of any form."