Venezuelan president arrested! Polymarket users predicted early and earned $400,000. The U.S. Congress has responded.

Polymarket faces controversy over large profits, suspected of front-running sensitive political information. The U.S. Congress is promptly pushing for legislation, signaling an official intensification of prediction market regulation.

Timing of large profits is sensitive; Polymarket trading behavior raises questions

Cryptocurrency prediction market platform Polymarket has recently become a focus of public discussion. A newly created account placed massive bets on contracts related to the removal of Nicolás Maduro, the President of Venezuela, just hours before the U.S. military action against Venezuela and the arrest of Maduro were publicly announced. Ultimately, within less than 24 hours after the news was disclosed, the account made profits exceeding $400,000.

Image source: Polymarket A newly created account placed large bets on Maduro’s removal just hours before the U.S. military action against Venezuela and the arrest of President Nicolás Maduro, earning $400,000 in profit.

Multiple media outlets pointed out that the account was only activated at the end of December, with very limited transaction records, mainly focusing on highly sensitive political and military events such as whether the U.S. would take action against Venezuela. At that time, the implied probability in the market remained very low, with contract prices near single-digit cents, yet there was abnormal volume and price increases just hours before President Trump confirmed the action, further fueling suspicions about the possession of non-public information.

On-chain data reveals abnormal patterns, multiple wallets placing synchronized large bets

Blockchain analysis firm Lookonchain later published monitoring results, indicating that at least three wallets placed large bets simultaneously hours before the event, with a total investment of about $65,000, ultimately earning over $630,000 in profit. These wallets were only created and funded a few days before the incident, with no prior transaction history, and their bets were highly concentrated on Venezuela and Maduro-related outcomes.

Image source: X/@lookonchain Lookonchain later published monitoring results, indicating that at least three wallets placed large bets simultaneously hours before the event, with a total investment of about $65,000, ultimately earning over $630,000 in profit.

Lookonchain describes this pattern of “single event, single direction, high leverage in a short period” as being highly similar to insider trading characteristics common in traditional financial markets. Although there is currently no evidence confirming the identities of the traders or their direct connections to government insiders, the on-chain behavior has already raised market concerns about regulatory gaps in prediction markets.

Further reading
Trump’s arrest of the Venezuelan president! China and Russia condemn it as a violation of international law, Bitcoin surges past 93,000 this morning

U.S. Congress Responds, Prediction Market Regulation Tightens

According to Jake Sherman, founder of Punchbowl News, who posted on X on Sunday (1/4), U.S. Representative Ritchie Torres will push for the “2026 Financial Prediction Market Public Integrity Act,” which, similar to insider trading regulations in traditional securities markets, restricts federal officials, political appointees, and administrative staff from trading prediction contracts related to government policies, political, or military outcomes when holding or reasonably accessing material non-public information.

Image source: X/@JakeSherman Jake Sherman posted on X on Sunday that U.S. Representative Ritchie Torres announced plans to promote the “2026 Financial Prediction Market Public Integrity Act.”

This bill is seen as one of the clearest regulatory attempts by the U.S. Congress to oversee prediction markets to date. Supporters believe that as the scale of prediction markets expands, their influence is no longer just an “experiment in crowd wisdom,” but could become a channel for arbitraging sensitive information.

Even though some platforms emphasize that they have banned trading based on material non-public information, in cross-border, decentralized, and identity-uncertain scenarios, enforcement and supervision still face significant challenges.

Re-examining prediction markets’ positioning, insider and information boundaries become focal points

This controversy has reignited discussions about the fundamental nature of prediction markets. Supporters have long argued that price changes can reflect collective judgment in real-time, even more accurately than traditional polls; but critics point out that when the market’s subject involves war, arrests, or diplomatic actions, it’s often difficult to distinguish whether rising prices represent crowd reasoning or the early acquisition of key information by a few.

In the Maduro case, some traders claimed to have inferred the impending action from public clues, such as observing military activity around Washington, D.C., but such claims have not quelled the controversy. As prediction markets increasingly focus on political and geopolitical conflicts, whether stricter participant restrictions and disclosure obligations are necessary has become a pressing issue for regulators and industry stakeholders.