A US congressman has introduced new legislation to block insider trading in prediction markets after speculation that government insiders may have personally profited from advance knowledge of the military operation in Venezuela.
The bill was introduced into the House of Representatives on Friday by the Democratic representative Ritchie Torres after suspicious, incredibly lucrative bets on Nicolás Maduro leaving office were placed hours before the former Venezuelan president was captured by the US.
The bets were placed on Polymarket, a US prediction market platform where users purchase shares in the outcome of a question. In this case, users bet on whether Maduro would be removed from power before 31 January 2026, with the share price calculated based on demand.
One Polymarket user collected more than $400,000 betting on Maduro's removal, with the vast majority of shares purchased in the 10 hours before military operations began. The user was created on 26 December, and has made only these trades. The account has since been deleted. Another user, following a similar pattern, made $80,000.
Both the timing and the huge profits led to speculation that the users had prior knowledge of military action. Paul Sibenik, a blockchain forensics and investigations expert, agreed the pattern was suspicious, telling The Observer: “What makes insider trading more likely is the multiple different wallets using the same pattern.”
Torres’s bill addresses a gap in the law, as this behaviour is not explicitly illegal in prediction markets.
Polymarket has so far talked down the prospect of increased regulation. In a November interview with Axios its CEO, Shayne Coplan, said: “I think what's cool about Polymarket is that it creates this financial incentive … for people to go and divulge the information to the market.”
Ari Redbord, a former US treasury official and head of policy at the blockchain forensics firm TRM Labs, said that “whether ‘insider trading’ applies in this context remains an open question under US law”, as existing legislation could not be easily mapped on to prediction markets.
Torres says the new bill will ensure that “government is not a for-profit enterprise”, and that elected officials cannot manipulate policy to line their pockets through prediction markets. With this legislation, he hopes to close the loophole before it is exploited further.
Photograph by Adam Gray/Bloomberg via Getty Images
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