The recent US military action against the Venezuelan regime, including the arrest of the president and first lady and their transfer to New York, has drawn international attention. However, the prediction market Polymarket ruled that betting on whether the US had invaded Venezuela did not constitute an invasion. This ruling has not only drawn criticism from users but also prompted renewed scrutiny of the lack of transparency in prediction markets regarding event definition, adjudication, and regulatory systems.
The US raid and arrest of the Venezuelan president has prompted market predictions to say it "doesn't count as an invasion."
On January 4, the U.S. military secretly entered Venezuela and took President Nicolás Maduro and his wife Cilia Flores to the United States. U.S. President Trump publicly stated that the U.S. would " temporarily take over " affairs related to Venezuela.
However, regarding betting on whether the United States would invade Venezuela before January 31 , the prediction market Polymarket ruled that the military action did not constitute an "invasion," refused to settle the bet, and compensated users who bet "yes."
The platform showed that the betting platform had a trading volume of over $6 million, and the probability of "yes" surged from 4% to 76.4% on the day of the incident, an increase of more than 18 times.
How the meaning is interpreted has become the key point of contention.
In its official supplementary statement, Polymarket defines "invasion" as "an action aimed at establishing military control over the territory or government of a country." The platform argues that although the action involves military intervention and the arrest of a national leader, it is a "raid and withdrawal" in nature and does not constitute complete control or occupation, therefore it does not meet the settlement conditions.
The above remarks have drawn criticism from users, who believe that the platform's interpretation of the meaning is too narrow and differs from the general understanding of the international community.
Users question the ruling, exposing the gray area of power in prediction markets.
Even though Polymarket defines itself as a platform rather than a house and does not participatein user betting , the platform and the major holders of the UMA protocol still retain the final right to determine whether an event is valid.
Users criticized the platform's rule changes after the incident as a "Polyscam": "The terms on Polymarket are arbitrarily defined, deviating from their generally accepted meanings."
It is utterly absurd that a military invasion, the kidnapping of a head of state, and the takeover of a country are not recognized as an invasion.
Of course, this is not the first time that Polymarket has been found to have engaged in market manipulation. The suspicion that the whale of the cooperative oracle UMA have dominated the market outcome through the voting mechanism has also been criticized.
The regulatory authorities remain silent, raising concerns about political connections.
Polymarket's operations in the United States are regulated by the CFTC , but neither the regulator nor the platform has publicly responded to this matter so far.
Interestingly, the relationship between Polymarket and the Trump family has also raised concerns about potential conflicts of interest. Donald Trump Jr.'s investment fund onceheld shares in Polymarket and served as an advisor.
A few days ago, Alex Witkoff and Zach Witkoff, sons of Steven Charles, a real estate billionaire friend of Trump, and co-founders of WLFI and Trump's son's private club , were also found to be involved in insider trading, betting $400,000 on Maduro's arrest through three new wallets.
Rethinking Polymarket: Users are buying into how the platform determines the outcome.
Polymarket has grown rapidly in recent years, attracting investment from traditional financial institutions, including ICE, the parent company of the NYSE, and reaching a valuation of $15 billion. However, various controversies show that while prediction markets provide a new type of information and price discovery mechanism, they still carry high risks until semantic interpretation, adjudication standards, and regulatory frameworks mature.
As the crypto communitycommented on this:
You must understand that when the market headline is "X", you are not betting on the outcome of "X", you are betting on "how Polymarket will determine the outcome of X?" Please understand what you are buying.
This article, titled "Does the US Consider This an 'Invasion' of Venezuela? Polymarket's 'No' Ruling Sparks Outrage," first appeared on ABMedia .
