Federal prosecutors have charged a Google software engineer with insider trading on the prediction market Polymarket, alleging he used confidential company information to rake in approximately $1.2 million in profits.
The Department of Justice filed a seven-count complaint in the Southern District of New York on Wednesday, accusing 36-year-old Michele Spagnuolo of exploiting his access to Google’s nonpublic “Year in Search” data. Between October and December of last year, Spagnuolo allegedly wagered more than $2.7 million on Polymarket under the pseudonym “AlphaRaccoon,” which he created in May 2024.
Spagnuolo, an Italian national living in Switzerland, faces charges of commodities fraud, wire fraud, and money laundering. If convicted on all counts, he could be sentenced to up to 50 years in prison, according to the DOJ.
“Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets,” said Jay Clayton, U.S. Attorney for the Southern District of New York. “As alleged, Spagnuolo violated the duties he owed to his employer and used Google’s confidential business information to make more than $1.2 million in trading profits on Polymarket. Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted.”
A Google spokesperson confirmed that the company 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. We’ve placed the employee on leave and will take the appropriate action,” the spokesperson told The Hill.
The Commodity Futures Trading Commission also filed a separate civil complaint against Spagnuolo on Wednesday, seeking restitution, disgorgement, civil penalties, and trading bans. CFTC Chairman Michael Selig stated, “We will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform on which those actions occur. Today’s action further underscores our commitment to rooting out insider trading and promoting market integrity in prediction markets.”
This case is part of a broader crackdown on insider trading in prediction markets. In April, the DOJ charged U.S. Army soldier Gannon Ken Van Dyke with using inside information about a planned raid to capture Venezuelan President Nicolás Maduro to place bets on Polymarket. The White House also issued a warning to staff in March against using nonpublic information for trading, and the Senate unanimously passed a resolution in April barring members and staff from trading on prediction markets.
The Trump administration has also taken legal action against several Democratic-led states over their regulations on prediction markets. President Trump said Tuesday that it is “critically important” for the CFTC to have exclusive authority over these platforms. Meanwhile, House Oversight Chair Comer has been probing prediction markets for insider trading risks, highlighting the growing scrutiny of this emerging financial sector.
Spagnuolo’s case underscores the potential for abuse in prediction markets, where anonymity and rapid trading can facilitate misconduct. The DOJ’s charges signal that law enforcement is closely monitoring these platforms, even as regulators and lawmakers debate how best to oversee them.
