Military Strategy & Political Economy
From billions placed on oil markets minutes before the Iran war disrupted them, to a US soldier betting on Maduro’s removal just before the US military removed him — 2025 and 2026 have offered vivid illustrations of what happens when those close to power also have a finger in the market.
Insider Trading 101
At its most basic, insider trading is trading in shares, securities, or other assets based on material non-public information. The asset being traded matters less than the information behind the trade.
This matters because it exploits two assumptions we tend to make about well-functioning markets:
- Risk and return are correlated. A ship running the Strait of Hormuz pays more for war risk insurance than one on a Pacific crossing. A bank charges more on an unsecured loan than one backed by a house. That’s the system working as designed — known risk is priced in.
- Public information is already priced in. The price of an asset should reflect everything currently in the public domain. But “public information priced in” is very different from “all information priced in.” Markets aren’t psychic, and a small group can hold information that hasn’t reached the wider market yet.
Consider the gap around any major corporate announcement. Lawyers working on a merger know the details long before the public does. A pharmaceutical company’s value can swing wildly on a clinical trial result that the research team knows weeks before release. In most places, trading on that kind of advantage is very, very illegal — though making something illegal doesn’t mean it stops happening.
The core formula
An insider just needs two things: (1) access to actionable secret information, or a way to create actionable information — and (2) a will and method to convert that information into personal profit.
The Financial Toolkit
The share market: big pond, big prizes
Global equity markets are an obvious target — enormous capital, companies whose values swing dramatically on specific geopolitical developments. A blockade of the Strait of Hormuz can catapult an energy producer in another country; a new tariff regime can collapse a car manufacturer. A simple insider move: buy shares you know will spike, enjoy the price increase when news breaks, close the position, walk away.
Derivatives: magnifying the bet
The simplest derivatives worth understanding are calls and puts — types of options tied to an underlying asset.
- A call option gives you the right to buy a specified amount of an asset at a locked-in price within a given timeframe — regardless of where the market goes.
- A put option gives you the right to sell at a locked-in price. Put values rise as share prices fall.
Options can be used to hedge genuine risk. They can also be used for leveraged speculation. Consider a simple example: a defense company trades at $500. You have $500. You could buy one share — your gain or loss mirrors the stock exactly. Or you could buy 50 call options at $10 each with a $525 strike price.
The leverage effect
If the stock ends below $525 at expiry, your options are worthless — a 100% loss. But if the stock moves meaningfully above that strike, your 50 options generate returns that dwarf a single share. The downside is crushing; the upside, for someone who knows which way the stock will move, is immense.
For a genuine insider, the market’s perception of risk may be entirely disconnected from their own. What the market prices as uncertain, the insider treats as a certainty.
About 18 minutes before President Trump announced a 90-day tariff pause in April 2025, there was a surge in trading activity. A $2 million bet on the market rising — placed after seven straight days of losses — reportedly could have generated nearly $20 million in profit.
BBC / various reporting, April 2025
Prediction Markets: Democratising the Insider Trade
Traditional insider trading generally requires information that moves large, liquid markets. A lot of genuine insider information is too niche for that. But prediction markets change the calculus dramatically.
The basic mechanic: you take a specific question — “Will Donald Trump visit Iran this year?” — and create shares in each possible outcome. Shares in the outcome that happens pay out $1 each; all other shares go to zero. The price of each outcome’s shares reflects the market’s estimate of its probability.
Why prediction markets expand the insider pool
By zooming down from market-moving macro events to highly specific discrete questions, prediction markets potentially turn everyone with relevant knowledge into a potential insider:
- Sports announcers become insiders when there are betting markets on the specific words they’ll say on air
- Video game cover artists become insiders when there are markets on release dates
- Military officers become insiders when there are markets on whether their unit will conduct a strike this week
- Map editors become insiders when market resolution depends on what their map shows
Two of the major prediction market platforms already report trading volumes in the tens of billions of dollars annually, with some estimates projecting $1 trillion in volume by 2030.
Real cases
A US special forces soldier allegedly placed thousands of dollars in bets that Nicolás Maduro would be removed from power — immediately before he was removed by the US military. An Israeli Air Force major and a civilian were separately arrested for allegedly using classified intelligence on the timing of Israeli strikes on Iran to place profitable bets.
In response, the US Senate eventually banned its members and staff from trading on prediction markets. The House of Representatives had not done so at the time of writing.
War, Volatility, and Perverse Incentives
The deeper danger isn’t just that insiders might trade on what they know. It’s how that opportunity changes how they act.
The incentive isn’t toward stability — it’s toward volatility
Long-term investors generally want stability, predictability, and low risk. But for an insider with derivatives or prediction market positions, the biggest payoffs often come from unexpected, violent swings. An insider who can accurately call a sharp move — and then call the snap-back — can potentially double their profit while limiting long-term market disruption.
Tariffs are an illustrative example: quick to announce, capable of generating massive market swings, and just as quick to pause or remove — creating the ideal conditions for a yo-yo trade. The same logic applies to military action, where even the threat of escalation can move commodity prices, currencies, and entire sectors.
The incentive at every level of a military hierarchy
Senior leadership can bet on broad market movements, manufacture volatility by stalling or reviving negotiations, and recommend military options that happen to benefit financial positions held by associates.
Planners and strategists can influence target selection in ways that move specific commodities or sectors, recommending options that serve financial interests rather than purely strategic ones.
Field commanders can time or sabotage operations to match their prediction market positions — ensuring a position isn’t taken by a certain date, for example, by scheduling the assault for the day after resolution.
Individual soldiers and operators can place small bets based on operational knowledge — and in doing so, create intelligence signals visible to adversaries monitoring those markets.
The ISW map incident
An openly published Ukraine war map became the focus of a real-world example of these incentives. Over a million dollars had reportedly been staked on whether Russian forces would take a particular settlement, with the declared resolution metric being whether a specific mapping site showed Russian control.
An unauthorized and unapproved edit to the interactive map was made on the night of November 15th–16th EST. The unauthorized edit was removed before the day’s normal workflow began and did not affect ISW mapping on that or any subsequent day.
Institute for the Study of War statement
Whether the edit was malicious or accidental, the incident illustrated a new threat: those reporting on a war might have financial incentives to distort that reporting — not for propaganda, but for personal profit.
The reverse is also documented: a journalist covering a missile strike near Jerusalem reportedly received threats after his report caused prediction market traders to lose roughly $900,000. One message reportedly gave him 90 minutes to retract the story or face retaliation.
Case Study: E-Mutopia vs. Kiwi Land
A hypothetical illustration of how insider trading incentives can corrode a military operation at every level — from the negotiating table to a lone drone operator on day four of what was supposed to be a 12-hour campaign.
The setup
Two fictional nations — E-Mutopia and Kiwi Land — are in a long-running standoff over Kiwi Land’s growing conventional missile program. The EMU leadership is divided between a peace camp (pursuing arms limitation talks) and a coercion camp (favouring military action). Tentative negotiations begin. Markets surge on the prospect of lasting peace.
Level 1: The negotiators
Insiders near the centre of power recognise that the market will recoil the moment the talks falter. They bet on that outcome — then manufacture it. Under the pretext of pushing back against “unrealistic demands,” they suspend the talks for a few days, cash in, and then announce the talks are back on. The yo-yo creates two profit opportunities. Trust erodes. Momentum toward a deal is lost.
Level 2: The backbench politicians
Politicians without detailed strategic knowledge pick up a general vibe: something bad is coming. They invest in bearish products that gain value when markets fall. Having done so, they now have a personal financial interest in ensuring things go badly — and when later briefed, they advocate for aggressive action, ideally before their options expire.
Level 3: The strategic planners
Two targets are identified: a missile assembly facility on the southern island and a massive rocket fuel complex on the northern island. Cold strategic advice says to focus on one. But the fuel complex is a major global supplier — bombing it would move markets significantly. So a couple of planners pass word to a “friend of a friend,” and the double-strike option is what ends up recommended to political leadership.
Level 4: The field officers
A junior officer is given a target and a date range. They don’t trade stocks, but they have a phone and knowledge that the strike is likely happening next week. They find a prediction market asking exactly that — and place a “harmless” bet. They aren’t the only one.
The intelligence problem
Kiwi intelligence, aware of the Maduro and Iran precedents, has added prediction market monitoring to its early warning system. The spike in bets that EMU will strike within 24 hours is cross-referenced with other indicators. Air defences go to high alert. What was meant to be a short, sharp surgical campaign runs into prepared resistance.
Level 5: The drone operator on day four
A drone operator is searching for downed aircrew from the opening strikes. The rumour mill says the crew has already been captured. The operator, facing a mortgage and a family at home, places a small bet: no rescue in the next 24 hours.
A few hours later, flying the mission, they see something — a clue. The crew might be here.
The central tension
Honour and duty say: call it out. Follow the lead. But calling it out means triggering a rescue operation — which might resolve the market the wrong way, costing them the bet. The system has placed a price on doing the right thing. Most soldiers would do the right thing anyway. But the incentive exists. And that’s the danger.
The running total
A few days into what was supposed to be a 12-hour operation: the EMUs are fighting a campaign they probably could have avoided, using a plan that could have been better, against an opponent who probably knew they were coming, with personnel whose heads may not fully be in the game. Back home, the public is being fed information through a financially compromised filter, shouting for escalation. Some insiders have cashed out. Everyone else is worse off.
What Can Be Done?
This isn’t a problem that can be killed overnight. Personal profit motives are as old as markets themselves — there are Roman-era laws restricting senators from owning large merchant ships, with historians speculating the intent was to prevent war profiteering. The incentive is fundamental.
The goal isn’t elimination — it’s making the risk of getting caught high enough to deter the attempt.
Prediction market regulation
- Restrict dangerous topics. Remove the ability to create prediction markets on military operations, ongoing conflicts, and other sensitive domains where insider information is especially dangerous.
- Remove insiders from the platforms. The US Senate eventually banned members and staff from trading on prediction markets — an obvious step that took a surprisingly long time. Extending this to military personnel and other officials with access to sensitive information is a natural next measure.
Non-participation
Unlike commodity markets, prediction markets serve no critical economic function. If insiders and advanced algorithmic traders are running the game, the non-insider participants are simply funding the winners’ payouts. The simple countermeasure available to ordinary participants: don’t play.
Accountability and traceability
Large trading spikes in liquid markets are hard to hide. An insider who wants to profit often has to trade in the open — which makes suspicious activity comparatively easy to spot:
- Establish ownership and traceability requirements so patterns are detectable
- Require disclosure of trades by officials, their family members, and close associates
- Restrict certain trading categories for anyone with security clearances
- Fund enforcement agencies to actually investigate — especially when the subject is powerful or well-connected
The underlying principle
Markets probably work better — and societies are probably safer — when those markets are perceived as broadly fair. Rampant insider trading doesn’t just redistribute wealth; it can destroy it, undermine public confidence in financial systems that ordinary people’s retirements depend on, and introduce perverse incentives into the exercise of political and military power. You don’t need to eliminate the risk entirely. You need to make it dangerous enough that the calculation changes.
Transcript reformatted for readability. Original content © Ping Gaming / Destroyers Army Series. All analysis is analytical and educational in nature — not financial advice.
Post-Neology 