Federal prosecutors charged Google software engineer Michele Spagnuolo with commodities fraud, wire fraud and money laundering after alleging he used confidential Google data to trade on Polymarket. The criminal complaint was unsealed on May 27, 2026, and prosecutors said the trades generated more than $1.2 million in profit.
The case is a direct test of how insider-trading rules apply to prediction markets. The CFTC filed a parallel civil complaint, seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction.
Google Search Data Becomes the Alleged Edge
Prosecutors said Spagnuolo, an Italian citizen residing in Switzerland, worked as a Google software engineer and used the Polymarket handle “AlphaRaccoon.” The complaint alleges he accessed confidential, nonpublic Year in Search data through an internal Google tool marked “Google Confidential.”
The alleged trading centered on Google-related prediction markets between October and December 2025. Spagnuolo risked about $2.75 million on markets tied to Google’s internal information, including contracts based on who would appear in the 2025 Year in Search rankings.
One highlighted wager involved the musician d4vd, who later appeared in Google’s public Year in Search results. The government alleges Spagnuolo knew key outcomes before the trading public, using internal data to trade with unusually strong accuracy.
The DOJ framed the conduct as misuse of corporate information for personal gain. U.S. Attorney Jay Clayton said corporate insiders cannot use confidential business information to profit in markets, while the FBI said the alleged conduct betrayed employer trust.
Prediction Markets Face Integrity Scrutiny
The CFTC said the case involved event contracts tied to Google’s official Year in Search list for 2025. Chairman Michael Selig said the agency would not tolerate insider trading regardless of technology or platform, placing prediction-market activity squarely inside market-integrity enforcement.
Google confirmed Spagnuolo was placed on leave and said it was cooperating with law enforcement, while Polymarket also cooperated with investigators. The case shows how blockchain-based trading records can become forensic evidence, even when the alleged misconduct begins with off-chain corporate data.
Prediction markets will need stronger surveillance, identity controls and suspicious-activity escalation, especially when contracts reference corporate data, government decisions or other nonpublic information.
The official DOJ release lists maximum penalties of 10 years for the Commodity Exchange Act count, 20 years for wire fraud and 20 years for money laundering. Those maximums are informational only, and any sentence would be determined by a judge if Spagnuolo is convicted.
This case is a warning that prediction markets are not an enforcement blind spot. Privileged information, transparent ledgers and fast-moving event contracts now sit inside the same risk perimeter, making insider-trading controls a core requirement for the sector.
