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U.S. prosecutors have charged Google software engineer Michele Spagnuolo with commodities fraud, wire fraud and money laundering over alleged insider trading on Polymarket.
The criminal complaint was unsealed in Manhattan on May 27. Prosecutors say Spagnuolo used confidential Google search data to make more than $1.2 million on bets tied to the company’s 2025 Year in Search results.
AlphaRaccoon Account Allegedly Made $1.2M
The complaint says Spagnuolo, a 36-year-old Italian citizen living in Switzerland, traded through a Polymarket account called AlphaRaccoon. Prosecutors allege he had access to an internal Google tool containing commercially valuable nonpublic search-trend data marked confidential.
They say he used that information to place Google-related prediction market bets before the Year in Search results were public. Spagnuolo appeared in federal court in New York on Wednesday.
25 Google Markets Carried $2.75M in Risk
The complaint says AlphaRaccoon risked about $2.75 million across roughly 25 Google-related Polymarket markets between Oct. 15 and Dec. 4, 2025. Prosecutors allege Spagnuolo first used internal data to bet that Kendrick Lamar would rank as Google’s top searched person.
They say he later shifted positions toward d4vd after Google’s internal rankings changed. When Google published its Year in Search results on Dec. 4, prosecutors say AlphaRaccoon had generated more than $1.2 million in profit.
5.045M USDC.e Transfer Backs Laundering Count
Federal prosecutors also allege Spagnuolo later moved about 5.045 million USDC.e through wallets and services designed to obscure the source and ownership of the proceeds. That alleged movement underpins the money-laundering count.
The charges remain allegations, and Spagnuolo has not been convicted. Google said misuse of confidential information for betting is a serious violation of company policy and that Spagnuolo has been placed on leave. Polymarket said it cooperated with law enforcement.
Case Tests Insider Trading Rules on Polymarket
The case is significant because it applies traditional market-abuse theories to prediction markets. U.S. Attorney Jay Clayton said insider trading laws apply regardless of whether the market is a stock exchange or an event-contract venue.
For prediction markets, the case adds another regulatory test. It shows prosecutors are prepared to treat event-contract trading as subject to fraud standards when traders allegedly exploit material nonpublic information.
