Planned Bill by US Congressman Set to Ban Insider Trading After Bettor Cashed-in Big on Maduro Capture

US Congressman Ritchie Torres has announced plans to introduce legislation aimed at curbing insider trading on prediction markets. The Democrat from New York revealed his intentions following revelations that a mysterious trader pocketed over $400,000 (£295,000) by wagering on the ousting of Venezuelan President Nicolás Maduro, just hours before the event unfolded.

This incident has ignited debates on the ethics of such platforms, where users bet on real-world outcomes, and highlighted potential vulnerabilities to exploitation by those with privileged information.

The Polymarket Windfall

The controversy centres on Polymarket, a decentralised prediction market where participants trade contracts based on future events. According to various accounts and reports, a newly created account placed bets exceeding $30,000 (£22,000) on Maduro being removed from power by 31 January 2026.

The wagers were made at low odds, around 7 cents (£0.05) per share, suggesting the trader anticipated a dramatic shift.

Overnight, US forces captured Maduro, resolving the market in favour of the 'yes' outcome. The anonymous bettor, identified only by a cryptic wallet address, cashed out with profits of approximately $436,759.61 (£322,372.27), representing a return of over 1,200 per cent.

Screenshots from the platform show the account's total win on this single bet, fuelling speculation that the individual had access to non-public intelligence about the operation.

One prominent post on X noted that the account had been active for mere hours before the bets and questioned ties to geopolitical developments. Critics argue this exemplifies how prediction markets, which thrive on aggregating crowd wisdom, can be distorted by informed insiders.

Maduro's Dramatic Ousting

The backdrop to this financial drama is the sudden capture of Nicolás Maduro. On 3 January 2026, US authorities announced they had taken the Venezuelan leader into custody during a covert operation.

This followed escalating tensions between the two nations, including threats of military action.

Maduro, who had clung to power amid economic turmoil and international sanctions, was reportedly extradited to face charges related to drug trafficking and corruption. The event sent shockwaves through global markets and politics, validating the Polymarket contract prematurely.

While the US government hailed it as a victory for justice, it raised questions about the timing and foreknowledge of such high-stakes actions.

The Proposed Legislation

Congressman Torres, representing New York's 15th district, swiftly responded by pledging to table the 'Public Integrity in Financial Prediction Markets Act of 2026'. The bill would explicitly prohibit federal employees, including those in intelligence and defence roles, from using confidential information to trade on platforms like Polymarket or Kalshi.

Torres stated that the Maduro bet underscores the need for safeguards, arguing that prediction markets should not become tools for profiting from sensitive government operations. If passed, the legislation could impose penalties similar to those for securities insider trading, including fines and imprisonment.

Reactions and Broader Implications

The proposal has divided opinions. Proponents of prediction markets, including Polymarket's CEO Shayne Coplan, maintain that insider trading enhances accuracy by incorporating privileged insights faster than traditional news sources.

Legal experts warn that without regulation; such practices could erode public trust and invite fraud. The Commodity Futures Trading Commission may scrutinise these platforms more closely, potentially classifying them under stricter financial rules.

This episode highlights the intersection of technology, politics, and finance in an increasingly digital world. As prediction markets grow, balancing innovation with integrity will be crucial. Torres' bill, expected to be introduced this week, could set a precedent for how governments address these emerging challenges.