US Lawmaker Targets Insider Trading with Venezuela Attack Prediction Market Bill

Washington circles are buzzing about a new legislative push that could turn geopolitical speculation into a regulated marketplace. A US lawmaker is drafting a bill to legalize prediction markets on sensitive events—like the Venezuela attack—aiming to outflank insider trading by making information public through market prices.

The Transparency Gambit

Forget backroom deals and whispered tips. This proposal would let traders bet on real-world outcomes, creating a public price signal that reflects collective intelligence. Supporters argue it's the ultimate transparency tool—flushing out hidden knowledge by monetizing it. Critics see a dystopian casino where tragedies become trading instruments.

Wall Street's New Frontier?

If passed, the bill would create a regulated framework for event contracts currently traded in gray markets. Proponents claim it would democratize access to geopolitical hedging tools while providing regulators with unprecedented visibility into market sentiment. Skeptics note Wall Street already profits from volatility—why not package it as a financial product?

The Insider Trading End-Run

Traditional insider trading relies on asymmetric information. Prediction markets theoretically eliminate that edge by aggregating all available knowledge into a single price. It's a clever regulatory bypass—using market mechanics to achieve what surveillance and enforcement often miss. Whether it prevents corruption or just creates new arbitrage opportunities remains the trillion-dollar question.

Because nothing says 'ethical markets' like letting financiers bet on foreign conflicts—after all, someone's got to monetize geopolitical instability before the think tanks finish their reports.

The Push For Integrity In Prediction Markets

On January 3, US President Donald announced a successful military mission in Venezuela resulting in the capture of President Maduro and his wife, Cilia Flores. The Republican-led administration in Washington accuses Maduro and his spouse of running a “narco-terrorist organization,” and both parties have been arraigned to face charges of drug trafficking in New York.

Amid the numerous condemnations and reactions to this MOVE by the US government, there have been revelations of insider trading around the event in the predictions market. Blockchain analysis page Lookonchain reports that three insider wallets placed Polymarket bets on the capture of Maduro just hours before the attack.

Data shows that these three wallets were recently created, funded, and only placed bets relating to Venezuela and Maduro’s capture to net total profits valued at $630,848. The largest of these transactions came from a trader who invested $34,000 to record gains of $409,900. 

According to the founder of PunchBowl News, Jake Sherman, Rep Ritchie Torres (D-N.Y.) aims to introduce a bill that illegalizes this act among government officials and protects important state-related information. The bill, which WOULD be titled the Public Integrity In Financial Prediction Markets Act of 2026, aims to ban all affiliated government persons from participating in the prediction market bets when exposed to certain information. 

Sherman states that the description of the proposed law read: 

This bill prohibits federal elected officials, political appointees, and Executive Branch employees from engaging in certain transactions involving prediction market contracts when they either possess material nonpublic information relevant to the transaction or could reasonably obtain such information through their official duties. 

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

Notably, prediction markets surged in late 2025 following growing Wall Street interest in the blockchain market infrastructure. Kalshi, which presently ranks as the largest prediction platform, is presently valued at $11 billion after a $1 billion fundraising in December.

Crypto Market Resilient Amid Venezuela Attack

In other news, the crypto market has shown no significant negative reaction to the US attack on Venezuelan soil. Over the last day, Bitcoin has moved by 2.13% to trade at $91,414 as the total crypto market cap climbed to $3.08 trillion.