A series of highly targeted bets on Polymarket generated more than $630,000 in profits shortly before reports emerged about the capture of Venezuelan President Nicolás Maduro.
Blockchain analysts flagged the trades as unusual due to their timing, size, and narrow focus on contracts linked solely to Maduro’s removal.
The activity has intensified concerns that prediction markets could be exploited by individuals with access to sensitive or non-public information.
On 4 January, blockchain analytics firm Lookonchain reported that three newly created digital wallets were responsible for the winning wagers.
The wallets were funded only days before the event and showed no previous trading activity on Polymarket or other markets.
Each wallet placed bets exclusively on outcomes tied to political developments involving the Venezuelan president.
One wallet, identified as 0x31a5, reportedly staked around $34,000 and secured close to $410,000 in profit.
A second wallet turned an investment of roughly $25,000 into about $145,600 within a short period.
A third wallet converted a smaller bet of approximately $5,800 into nearly $75,000.
Analysts noted that the wagers were executed shortly before the news circulated widely across global media.
The precision and concentration of the bets raised questions about whether the traders had advance knowledge of the operation.
Lookonchain said the wallets’ behaviour strongly suggested access to information not available to the public.
The firm added that the pattern was consistent with insider-style trading rather than speculative betting.
The revelations prompted swift political reaction in Washington as lawmakers assessed regulatory gaps.
US legislators are now moving to restrict government officials from participating in prediction markets.
Representative Ritchie Torres is expected to introduce the Public Integrity in Financial Prediction Markets Act of 2026.
The proposed legislation would bar federal officials from profiting from outcomes they may influence or foresee.
Reports from Punchbowl News indicate the bill would impose a strict prohibition on such activity.
The restrictions would apply to elected officials, political appointees, and executive branch employees.
Covered platforms would include prediction markets operating in interstate commerce, such as Polymarket and Kalshi.
The restriction applies to buying, selling, or exchanging prediction market contracts tied to government policy, government action, or political outcomes on platforms engaged in interstate commerce.
Jake Sherman said.
The bill aims to align prediction markets with ethical standards similar to those in the STOCK Act.
It would explicitly ban the use of material non-public information related to enforcement actions, court decisions, or foreign policy.
Supporters argue the measure is necessary to preserve public trust in emerging financial markets.
Critics warn that unclear rules could stifle innovation in decentralised prediction platforms.
The incident has reignited debate over how to regulate crypto-based betting without undermining transparency.
Lawmakers say clearer boundaries are needed as prediction markets grow in scale and influence.
The case underscores the challenges regulators face in balancing open markets with ethical safeguards.