Lawmaker Targets Prediction Market Insider Trading After $400K Maduro Bet

The Public Integrity in Financial Prediction Markets Act of 2026 would prohibit federal officials from trading on platforms like Polymarket and Kalshi when they possess material nonpublic information about government policy or political outcomes.

The Suspicious Bets That Sparked Outrage

Blockchain analytics firm Lookonchain identified three digital wallets that collectively profited $630,484 by betting on Maduro’s ouster. The timing and behavior of these accounts raised immediate red flags across the crypto community.

The most prominent account, created in late December 2025, wagered approximately $32,500 on contracts predicting Maduro would be removed from power by January 31, 2026. When U.S. forces captured the Venezuelan leader overnight, those shares resolved near $1 each, yielding profits exceeding $400,000—a return of more than 1,200% in less than 24 hours.

According to on-chain data, the three wallets showed remarkably suspicious patterns. Wallet 0x31a5 invested $34,000 and profited $409,900. A second wallet invested $5,800 and made approximately $75,000. The third wallet invested $25,000 and profited $145,600.

Source: @JoePompliano

What made these trades particularly alarming was their precision. All three wallets were created and funded days before the operation. They had no prior trading history on other markets and exclusively bet on Venezuela and Maduro-related events. The bets were placed just hours before Trump announced the military operation, when market prices sat at around 7 cents—implying only a 7% probability of the outcome.

Operation Absolute Resolve

The U.S. military operation that captured Maduro involved over 150 aircraft launched from 20 bases across the Western Hemisphere, according to Joint Chiefs Chairman Gen. Dan Caine. The mission, named Operation Absolute Resolve, successfully extracted Maduro and his wife from Venezuela’s largest military complex at Fuerte Tiuna.

President Trump gave final approval for the mission at 10:46 p.m. ET on Friday, January 2. Hours later, explosions rocked Caracas as U.S. forces moved in. Maduro now faces narco-terrorism and drug trafficking charges in New York, stemming from a 2020 federal indictment.

The Polymarket market for Maduro’s removal had hovered at low probabilities for weeks before suddenly spiking around 4:20 a.m. ET on January 3—right around the time of Trump’s announcement. Kalshi, another prediction platform, had priced similar outcomes at roughly 13 cents, showing how unexpected the operation was to most traders.

Torres’s Legislative Response

Representative Torres plans to introduce his bill as soon as possible, according to his spokesman. The legislation would extend STOCK Act principles to prediction markets. Kalshi and Polymarket, the two dominant platforms, generated over $44 billion in combined trading volume in 2025.

The bill would bar federal elected officials, political appointees, and executive branch employees from buying, selling, or exchanging prediction market contracts when they possess material nonpublic information through their official duties. The restriction applies to contracts tied to government policy, government action, or political outcomes on platforms engaged in interstate commerce.

“A newly created Polymarket account invested over $30,000 yesterday in Maduro’s exit. The US then took Maduro into custody overnight, and the trader profited $400,000 in less than 24 hours,” sports commentator Joe Pompliano noted on social media, highlighting concerns about insider advantages.

A spokesman for Torres said the bill has been “in the works for a bit,” but the Venezuela bet news underscored the urgency of introducing it immediately. The legislation currently has no co-sponsors, though Torres hopes to build a broader coalition of support in coming weeks.

Prediction Markets Under Scrutiny

The Maduro betting scandal arrives as prediction markets gain mainstream attention and institutional backing. Polymarket recently secured regulatory approval to operate in the United States after acquiring QCEX for $112 million in July 2025. Intercontinental Exchange, which owns the New York Stock Exchange, invested up to $2 billion in Polymarket at a valuation between $8-9 billion.

During the 2024 presidential election, Polymarket correctly predicted Donald Trump’s victory while many traditional polls showed different results, cementing the platform’s reputation as a legitimate forecasting tool. However, critics argue that when markets involve sensitive political or military outcomes, they become vulnerable to exploitation by insiders with privileged information.

In response to the controversy, Kalshi’s press relations account stated that its rules prohibit insiders or decision-makers from trading on material nonpublic information. Polymarket could not be reached for comment.

Notably, Donald Trump Jr. maintains advisory roles at both major platforms—serving as a strategic advisor to Kalshi since January 2025 and joining Polymarket’s advisory board in August 2025 after his venture capital firm made an eight-figure investment.

The Bigger Picture

The incident highlights fundamental questions about decentralized prediction markets. While blockchain technology provides transparency by making all trades publicly visible, it cannot prevent people with inside knowledge from exploiting that information for profit.

Unlike traditional financial markets where insider trading is clearly illegal and heavily policed, prediction markets currently operate with fewer regulations. Federal law enforcement and military personnel who might have advance knowledge of operations like the Venezuela strike face no legal barriers to profiting from that information on platforms like Polymarket.

One trader even claimed to have made $80,000 betting on Maduro’s capture after noticing increased Domino’s Pizza orders near the Pentagon—often used as a proxy for late-night military activity. While this represents clever observation rather than insider knowledge, it illustrates how information asymmetries can create massive profit opportunities.

Democratic Senator Mark Warner, vice chairman of the Senate Intelligence Committee, expressed concerns about the precedent set by the Venezuela operation itself. “Does this mean any large country can indict the ruler of a smaller adjacent country and take that person out?” he told CBS News.

The Road Ahead

As prediction markets continue growing and attracting institutional investment, the tension between transparency and fairness will likely intensify. The platforms offer unprecedented ability to aggregate information and forecast future events, but that same openness creates opportunities for those with privileged access to profit unfairly.

Torres’s legislation represents the first major congressional effort to impose insider trading restrictions on prediction markets. If passed, it would treat these platforms more like regulated financial markets by prohibiting government personnel from using material nonpublic information for personal gain.

The bill aims to protect the integrity of markets that rely on the wisdom of the crowd. When insiders can exploit advance knowledge, they undermine that fundamental principle and erode public trust in prediction markets as neutral forecasting tools.

Whether the legislation gains traction remains uncertain. The crypto and prediction market industries have invested heavily in lobbying and building political support. How Congress balances innovation with market integrity will shape the future of this rapidly growing sector.

For now, the three mysterious wallets that profited over $630,000 remain pseudonymous, and their gains remain intact. The blockchain shows what happened and when, but it cannot reveal who placed the bets or what information they possessed.