Google Engineer Charged in $1.2M Polymarket Insider Trading

Federal prosecutors have charged a Google software engineer with using confidential internal search data to make approximately $1.2 million in profits on the Polymarket prediction platform, marking the second major insider trading case involving the rapidly growing industry in just over a month.

Michele Spagnuolo, a 36-year-old Italian citizen and Google employee of 12 years residing in Switzerland, was arrested on May 27 and charged with commodities fraud, wire fraud, and money laundering, according to the U.S. Department of Justice. Operating under the Polymarket handle “AlphaRaccoon,” Spagnuolo allegedly accessed Google’s confidential “Year in Search” data through an internal software tool marked “Google Confidential” in red text, then placed bets on search trends before they were publicly released.

How the Scheme Worked

According to the criminal complaint unsealed in the Southern District of New York, Spagnuolo created his Polymarket account in May 2024 and began placing bets on October 15, 2025. Over the following weeks, he risked approximately $2,754,092 across 25 separate outcomes related to Google’s 2025 “Year in Search” results, which track the year’s most popular search terms.

As internal Google data evolved, Spagnuolo adjusted his bets accordingly. He initially wagered that Kendrick Lamar, who headlined the 2025 Super Bowl halftime show, would top the most-searched list. When internal data showed that alt-pop singer D4vd — who was later charged with murder — was leading search traffic, Spagnuolo shifted his bets. The complaint alleges he also wagered nearly $1 million that Bianca Censori would not be the most-Googled person and more than $600,000 that Pope Leo XIV would not take the top spot.

When Google publicly released its “Year in Search 2025” results on December 4, 2025, Spagnuolo’s AlphaRaccoon account profited approximately $1.2 million. Social media users quickly flagged the account for suspiciously accurate trades, with the account Polymarket Money posting: “$1.15M profit in 24 hours trading Google search markets. Who is AlphaRaccoon?”

Legal Charges and Prosecution

Spagnuolo faces up to 10 years in prison for violating the Commodity Exchange Act, up to 20 years for wire fraud, and up to 20 years for money laundering. He was presented before U.S. Magistrate Judge Sarah Netburn and released on a $2.25 million bond. He did not enter a plea.

U.S. Attorney Jay Clayton stated: “Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets. Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted.”

The Commodity Futures Trading Commission filed a parallel civil complaint seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction. CFTC Chairman Michael S. Selig said the Commission “will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform that is used.”

Corporate and Platform Response

Google placed Spagnuolo on leave and confirmed it is cooperating with law enforcement. “The employee accessed our marketing material using a tool available to all employees, but using such confidential information to place bets is a serious breach of our policies,” Google spokesperson Jaclyn Vazquez said in a statement, as reported by AP News.

Polymarket, the blockchain-based prediction platform, emphasized its cooperation with authorities. “Polymarket worked closely with the U.S. Attorney’s Office for the Southern District of New York and the CFTC, and is the only prediction platform to date whose cooperation has led to insider trading charges in the United States,” said Olivia Chalos, the company’s chief legal officer. “Blockchain trading is transparent, traceable, and bad actors leave footprints.”

Broader Implications for Prediction Markets

The case arrives at a pivotal moment for the prediction market industry, which has exploded in popularity during President Trump’s second term. Just last month, U.S. Army Special Forces Master Sergeant Gannon Ken Van Dyke was charged with using classified information about the Maduro capture operation to make over $400,000 on Polymarket.

The charges signal that prosecutors view prediction market contracts as financial instruments subject to the same anti-fraud protections as traditional securities and commodities. The case also raises questions about data security at major technology companies, given that Spagnuolo accessed the confidential data through a tool “available to all employees.”

Political Context

The charges were unsealed just one day after President Trump posted on Truth Social opposing state-level prediction market bans and asserting federal regulators’ “exclusive authority” over the industry. The administration has simultaneously embraced the industry — dropping an FBI investigation into Polymarket founder Shayne Coplan and inviting him to the White House — while prosecuting individual bad actors.

President Trump’s oldest son, Donald Trump Jr., serves as an advisor to both Polymarket and Kalshi and is a partner in 1789 Capital, a major Polymarket investor. The complex dynamic has put the industry at the center of a broader debate over regulation, consumer protection, and market integrity.

What’s Next

As prediction markets grow from niche platforms into multibillion-dollar operations covering everything from elections to corporate earnings to pop culture, the Google case demonstrates their vulnerability to the same information asymmetries that plague traditional financial markets. Polymarket has already rewritten its rules to explicitly prohibit trading on contracts where users might possess confidential information or could influence an outcome. However, with two major insider trading cases in rapid succession, calls for clearer regulatory frameworks are likely to intensify.