Is Polymarket’s “divine predictions” really the breeding ground for insider trading?

Even before the news had time to take effect, investors already made their decisions. Data from the crypto prediction market showed that an anonymous account, created less than a week ago, placed a large bet of $30,000 on “Maduro stepping down” late at night. Within a few hours, the price of the contract rose sharply from $0.05 to nearly $1. The total trading volume in this market exceeded $120 million. As Trump announced the success of the military operation, this account increased its profit by more than $400,000 within 12 hours, achieving a yield of 1200%. What’s even more interesting is that on Friday night, just before the official announcement, several newly registered accounts placed bets on “yes,” and they mostly traded contracts related to Venezuela. This incident once again highlights how crypto prediction markets are becoming the earliest and most direct places where geopolitical risks are priced.

I. Event Review

On December 27, 2025, an account named “Burdensome-Mix” was quietly created on the Polymarket prediction market platform. This account hardly attracted any attention during the following week, until it became the account with the largest position betting on “Maduro stepping down”.

● Over the past four days, this account invested a total of $32,537, all of which were placed on Maduro stepping down by January 31st. On Friday evening, just hours before the military operation news became public, this account made significant investments. At that time, the market’s estimate of the probability of US intervention in Venezuela was only around 6%, and the contract price was between $5 and $7 cents.

● As Trump officially announced in the early hours of Saturday that American special forces had successfully captured Maduro and his wife near Caracas, and brought them out of Venezuela, the probability of this event quickly rose to nearly 100%.

● The value of the contracts related to this mysterious account skyrocketed, with a final profit of $404,222, representing a return rate of 1242%. This precise prediction yielded astonishing returns in less than a day.

II. Market Changes

● According to multiple media reports, before Trump’s official announcement, the price of contracts on Polymarket predicting whether Maduro would lose power by the end of January experienced abnormal fluctuations late on Friday.

● Analysis by Axios indicated that trading activity on Polymarket began to rise around 10 PM ET on Friday, and reached its peak around 4:20 AM on Saturday—just before Trump’s announcement.

● Market data showed that the prices of related contracts on Polymarket rapidly increased from low probabilities to nearly 100% after the successful operation by American special forces on January 3rd, resulting in trading volumes exceeding $120 million.

● In contrast, the price of contracts on the regulated prediction website Kalshi regarding Maduro’s departure only fluctuated around 13 cents during the same period, indicating that the flow of funds on Polymarket was clearly premature and unusual.

This difference raised serious concerns among market observers regarding potential information leaks.

III. Key Questions

The most striking aspect of this unusual transaction is that the timing of the transaction coincides closely with the timeline of US military decisions. Initially, US military officials planned to carry out the attack during Christmas season, but the plan was postponed to early January due to weather conditions. Although the Trump administration has managed to prevent media leaks relatively successfully, the abnormal fluctuations in market data suggest that some market participants may have been aware of the details of the operation beforehand.

Sports business analyst Joe Ponpijanos wrote on social media platform X: “Yesterday, a newly created Polymarket account invested over $30,000 in ‘Maduro’s removal from power.’ The US will launch an attack on Maduro at night, and traders earned $400,000 in less than 24 hours.”

He pointed out sharply: “Insider trading isn’t only allowed, but even encouraged in the prediction market.”

Another trader shared a post on X, claiming that he made $80,000 overnight using signals related to US military activities. This trader revealed that the US had already deployed its largest aircraft carrier earlier, which convinced him that an attack on Venezuela was imminent.

The only unknown factor is the time frame. Therefore, he created a simple robot to monitor orders for Domino’s Pizza near the Pentagon. This practice has long been associated with government operations during late nights.

The trader wrote, “As soon as the pizza indicator robot detected any unusual activity, I received a notification on my phone. I immediately bought as many contracts as possible on Polymarket, with the ticker ‘Will the US attack Venezuela?’”

Fourth, there is a regulatory void. This incident once again highlights the gray areas in market regulation. The U.S. Commodity Futures Trading Commission typically prohibits transactions involving matters related to war, terrorism, and assassination, which go against the public interest.

However, Polymarket, being a global platform, is theoretically not accessible to American users. Therefore, it effectively avoids direct oversight by U.S. regulatory agencies.

This regulatory void creates opportunities for potential insider trading and information abuse. Prediction markets were originally designed as tools to gather collective wisdom and predict future events. But when it comes to highly sensitive political and military information, they can become channels for profiting from undisclosed information.

It’s particularly noteworthy that most of the newly created accounts focus exclusively on markets related to Venezuela. Such a highly targeted investment strategy is extremely rare under normal circumstances.

Market observers on X noted, “This account, Burdensome-Mix, has existed for only a week, yet it quickly became the account with the most ‘yes’ votes in the market predicting Maduro’s removal from power. This is very suspicious.”

This pattern suggests that some participants may possess undisclosed information about geopolitical events and use prediction markets to turn this information into huge profits.

V. Legislative and Regulatory Responses

In response to the risks of insider information abuse exposed by this incident, American legislators have taken action. According to Axios, Representative Ritchie Torres plans to introduce the “2026 Financial Prediction Market Public Integrity Act.”

The act aims to restrict federal officials from participating in such markets, thereby preventing the use of confidential political or military information for profit purposes.

Torres emphasized in a statement, “When elected officials or government employees can use internal information to profit from prediction markets, it undermines public trust in financial markets. We need clear rules to prevent such abuse.”

In addition to legislative responses, this incident has also sparked widespread discussions about the ethical boundaries and regulatory frameworks for prediction markets. Some analysts believe that prediction markets should impose stricter restrictions or even ban certain types of contracts when involving geopolitical events.

On the other hand, market proponents argue that prediction markets provide a valuable tool for assessing the likelihood of events. The issue lies not in the markets themselves, but in how insider information abuse can be prevented.

It is worth noting that at the time of this incident, the prediction market industry is facing increasingly strict scrutiny. The CFTC has previously taken legal action against Polymarket, accusing it of offering unregistered binary options contracts.

Although a settlement was reached between the parties, regulatory pressure remains. This incident, involving a precise prediction of Maduro’s removal from power, could further intensify regulators’ attention to prediction markets.

VI. Implications and Future Directions

The impact of this incident has extended beyond the financial market, affecting areas related to national security. When market participants can predict military actions by monitoring government activities, it reveals an unsettling intersection between national security decision-making and financial market operations.

Geopolitical analysts believe that such precise predictions not only concern individual traders’ profits but also reflect the new challenges posed by information technology in terms of national security. In an era dominated by social media and prediction markets, traditional security measures are facing unprecedented challenges.

Looking ahead, this incident could have multiple implications. At the legislative level, the legislation proposed by Torres may be just the beginning; there may be more efforts to regulate prediction market activities in the future.

On the industry level, prediction market platforms may be forced to strengthen their self-regulatory mechanisms, implement stricter transaction monitoring systems, or actively restrict certain types of contracts involving national security matters.

At the international relations level, this incident highlights how non-state actors can use financial market tools to respond to or even predict geopolitical events. This ability could influence the decisions made during future conflicts.

When markets can “predict” military actions with near-real-time accuracy, policymakers will need to consider whether and how their plans are reflected in market prices.

As prediction markets play an increasingly important role in assessing the likelihood of events, how to leverage their information aggregation capabilities while preventing the abuse of inside information and national security risks becomes a key challenge for policymakers, regulatory bodies, and market operators.

This instance of “Maduro’s removal from power” may just be the tip of the iceberg in this complex issue.