A cryptocurrency-based prediction market has become the center of an alleged insider trading investigation after an anonymous bettor profited nearly half a million dollars from Venezuela’s political upheaval. The suspicious activity occurred on Polymarket, where wagers on President Nicolás Maduro’s removal surged hours before Donald Trump’s official announcement regarding the Venezuelan leader’s capture.
Market data reveals dramatic odds fluctuations in the critical hours preceding Trump’s Truth Social post. On January 2nd, traders placed mere 6.5% probability on Maduro’s exit by month’s end. However, these odds jumped to 11% by midnight and experienced a significant surge in the early hours of January 3rd—immediately before Trump’s revelation that Maduro was in U.S. custody.
One particularly fortunate account, created just last month with exclusive focus on Venezuelan political outcomes, transformed a $32,537 wager into $436,000 profits. The account’s blockchain identifier, consisting of anonymous letters and numbers, has concealed the bettor’s identity despite the substantial gains.
Financial reform advocacy group Better Markets has characterized the transaction as exhibiting ‘all the hallmarks of a trade based on inside information.’ Several other Polymarket users also generated tens of thousands in profits from wagers on Maduro’s capture, amplifying concerns about information integrity.
In response to these developments, Congressman Ritchie Torres (D-NY) introduced legislation seeking to prohibit government employees from trading on prediction markets when possessing material nonpublic information. The bill specifically targets those who may reasonably obtain such privileged information through official channels.
The prediction market industry, which handled hundreds of millions in wagers during the 2024 presidential election, operates in a regulatory gray area. While traditional stock markets enforce strict insider trading prohibitions, prediction markets like Polymarket and competitor Kalshi face less stringent oversight despite company policies against insider trading. The industry has experienced fluctuating regulatory reception, facing scrutiny during the Biden administration while receiving warmer acceptance during Trump’s presidency, notably with Donald Trump Jr. serving in advisory roles at both major prediction market platforms.