U.S. authorities have charged a Google software engineer over an alleged insider trading scheme tied to crypto-based prediction market platform Polymarket, marking one of the highest-profile enforcement actions involving event contracts and digital asset trading platforms.
Federal prosecutors said Michele Spagnuolo, a Google employee, used confidential company information linked to Google’s 2025 search trend rankings to place profitable bets on Polymarket before the data became public.
“A Google employee allegedly used confidential information to make more than $1.2 million through insider trading on a prediction market,” said U.S. Attorney Jay Clayton. “Corporate insiders who misuse confidential information to trade for personal gain will be prosecuted.”…
— US Attorney SDNY (@SDNYnews) May 27, 2026
According to the U.S. Department of Justice, the alleged trades generated around $1.2 million in profit through a Polymarket account operating under the name “AlphaRaccoon.”
Prosecutors link Google data to Polymarket bets
Court documents unsealed Wednesday alleged that Spagnuolo placed 25 bets totalling about $2.7 million on Polymarket markets tied to the most-searched individuals on Google in 2025.
Prosecutors claimed the bets targeted outcomes that most users on the platform considered unlikely before Google released the rankings publicly in December.
U.S. Attorney Jay Clayton said the case highlights growing concerns around insider trading in prediction markets.
“A Google employee allegedly used confidential information to make more than $1.2 million through insider trading on a prediction market,”
Clayton said in a statement released by the Justice Department.
Investigators also claimed online users on Discord and X had suspected in December that the AlphaRaccoon account belonged to a Google insider. Authorities said the account name was later changed to a wallet address after those discussions surfaced online.
CFTC expands crackdown on prediction markets
Alongside the criminal charges, the Commodity Futures Trading Commission filed a separate civil complaint accusing Spagnuolo of insider trading violations tied to commodities markets.
The agency said the case reflects increasing scrutiny of prediction market platforms such as Polymarket and Kalshi, especially around the misuse of nonpublic information. CFTC Enforcement Director David Miller said insider trading laws apply to prediction markets just as they do in traditional financial markets.
The civil complaint seeks restitution, financial penalties, and permanent trading bans.
This marks the second high-profile insider trading case related to Polymarket unsealed by the DOJ, following the April arrest of a U.S. Army soldier who allegedly used classified military intelligence to bet on the capture of Venezuelan President Nicolás Maduro.
Will this push mounting regulatory pressure on prediction markets?
The case comes as U.S. regulators and state authorities continue debating how prediction markets should be regulated.
Earlier this month, the CFTC sued Minnesota after the state approved legislation banning prediction market activity starting August 1. Several states, including Nevada, New Jersey, Ohio, Illinois, Maryland, and Montana, have also launched actions against platforms offering event-based contracts.
Meanwhile, the White House Office of Management and Budget is reviewing a proposed CFTC rule covering prediction market contracts following thousands of public comments focused on insider trading risks and market safeguards.
Federal prosecutors charged Spagnuolo with commodities fraud, wire fraud, and money laundering. If convicted, he could face up to 50 years in prison.
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