Federal prosecutors have charged Michele Spagnuolo, a 36-year-old Italian citizen and Google software engineer, with commodities fraud, wire fraud, and money laundering. The charges, filed in the Southern District of New York and unsealed on Wednesday, allege that Spagnuolo used confidential internal Google data to place bets on the prediction market Polymarket, earning approximately $1.2 million.
"I used Google's confidential business information to make trading profits."
— U.S. Attorney Jay Clayton
Key Details
Arrest and Release
- Spagnuolo was arrested in New York and released on a $2.25 million bond.
- He appeared before a federal magistrate judge on Wednesday and did not enter a plea.
Employment
- Spagnuolo has worked at Google for over 12 years as a staff information security engineer.
- He resides in Switzerland.
Alleged Method
- Between October and December 2024, Spagnuolo allegedly accessed Google's internal data systems, including a software tool that provided nonpublic "Year in Search" data.
- He used this information to place approximately $2.75 million in bets on Polymarket under the username "AlphaRaccoon."
Bet Details
- Spagnuolo correctly wagered that singer D4vd would be Google's most-searched person for 2025, despite other traders assigning a near-zero probability to that outcome.
- He also allegedly bet that Pope Leo XIV and Kendrick Lamar would not appear on Google's "Year in Search 2025" lists.
Concealment
- After transferring his winnings out of his cryptocurrency wallet, Spagnuolo removed the username "AlphaRaccoon" from his Polymarket account.
- The complaint states he took steps to conceal the source and ownership of the proceeds.
Charges
- Spagnuolo faces charges of:
- Violating the Commodity Exchange Act
- Commodities fraud
- Wire fraud
- Money laundering
- The maximum combined sentence is 50 years in prison.
Civil Case
- The Commodity Futures Trading Commission (CFTC) filed a separate civil case against Spagnuolo for alleged commodities law violations.
Statements
- A spokesperson stated that the employee accessed marketing material using a tool available to all employees, but using confidential information for bets is a serious breach of policy.
- Spagnuolo has been placed on leave, and the company stated it is working with law enforcement.
Polymarket
- A spokesperson stated that the platform's "market integrity infrastructure" flagged the activity and that it cooperated with the U.S. Attorney's Office and the CFTC.
- The spokesperson noted this is the first insider trading case on a prediction market in the United States.
U.S. Attorney Jay Clayton
- Stated that prosecutors will pursue corporate insiders using confidential information in prediction markets.
Spagnuolo
- Did not return a request for comment.
Background and Context
Related Cases
- This is the second federal criminal case involving insider trading on Polymarket.
- In April 2025, U.S. Army Special Forces master sergeant Gannon Ken Van Dyke was charged with using classified information to bet on contracts related to a U.S. military operation in Venezuela, making over $400,000. Van Dyke has pleaded not guilty.
Industry Growth
- Prediction markets such as Polymarket and Kalshi have grown in popularity, allowing bets on a wide range of topics including politics, entertainment, and current events.
Regulatory Landscape
- The legal status of prediction markets is contested:
- Some state officials view them as gambling.
- The Trump administration has treated them as futures contracts under CFTC jurisdiction.
- Minnesota became the first U.S. state to ban prediction markets, effective August 2025.
- Some federal lawmakers have proposed bills to regulate such markets.
Platform Measures
- Polymarket and Kalshi have stated they have implemented measures to prevent insider trading, including blocking politicians and sportspeople from betting.
Industry Scrutiny
- The charges come amid increased scrutiny of prediction markets in the U.S., with lawmakers expressing concerns about insider trading and regulatory gaps.