Original article | Odaily Odaily( @OdailyChina )
Author | Asher ( @Asher_0210 )
The worst thing about predicting the market is not that someone can make accurate predictions, but that someone knows the answer in advance.
Recently, the U.S. Attorney's Office for the Southern District of New York released indictment documents alleging that Google security engineer Michele Spagnuolo used internal company tools to access data related to the most searched people in 2025 and then traded the corresponding market data on Polymarket through linked accounts, ultimately profiting over $1.2 million. Spagnuolo has been arrested and charged with charges including merchandise fraud, wire fraud, and money laundering.
A Google employee has his eye on the search ranking market.
The case originated from a prediction market on Polymarket related to Google search results. These markets predict whether certain individuals will appear on the list of most searched people in 2025. For ordinary traders, this is a matter of judging trending topics and traffic, but Spagnuolo's identity makes the matter sensitive.
The indictment documents show that Spagnuolo, a Google security engineer, had access to internal company tools to view relevant search data. Subsequently, an associated account named AlphaRaccoon began buying on Polymarket, transferring approximately 3.8 million USDC to a Polymarket address and participating in multiple prediction markets related to Google search results.
One of the most crucial deals involved singer D4vd. Spagnuolo had seen D4vd's search popularity rising using Google's internal tools, and hours later, the AlphaRaccoon account made a deal on Polymarket, believing that D4vd would become one of the most searched figures in late November.
This is also the core of the prosecution's charges. Ordinary users buy D4vd betting on news hype and social media buzz; but if a trader has just reviewed internal Google search data before trading in the corresponding market, the transaction is no longer simply about capitalizing on a trending topic. The prosecution argues that Spagnuolo used material non-public information to participate in the trading and profited over $1.2 million through these operations.
The flow of funds from Polymarket to Italian accounts has come to light.
After the transaction was profitable, the flow of funds also came into the prosecutor's view.
According to the indictment, AlphaRaccoon subsequently transferred 5 million USDC.e from his Polymarket account to a wallet. The funds were then transferred through exchange services and privacy tools, with some ultimately ending up in an Italian payment processing account. Prosecutors allege that this account was opened using Spagnuolo's own identity documents.
In other words, the prosecution did not just discover an account with abnormal profits on Polymarket, but rather connected internal tool access records, transaction times, on-chain transfer paths, use of privacy tools, and the real-world account that ultimately received the funds.
Google stated that it is cooperating with law enforcement investigations and has suspended Spagnuolo from his duties.
Google subsequently responded that the company is cooperating with law enforcement investigations and has suspended Spagnuolo from his duties.
A Google spokesperson stated that the employee used a tool accessible to all company employees to view marketing materials, but trading such confidential information constitutes a serious violation of company policy, and the company will take appropriate action.
The prosecution further alleged in the indictment that Spagnuolo not only used material non-public information to participate in Polymarket transactions, but also attempted to conceal the source and ownership of his profits by transferring funds through wallets, exchange services, and privacy tools after making a profit.
Polymarket's compliance pressures are entering a deeper phase.
The impact of this case extends beyond the arrest of a Google engineer.
Recently, Polymarket has faced more controversy stemming from regional access restrictions and regulatory classifications. The Spanish government issued a preventative ban on Polymarket, citing its alleged operation without a gambling license; Indonesia's Ministry of Communications and Digital also banned Polymarket, designating it as an illegal online gambling platform.
Now, the pressure is starting to fall on the trading itself. According to The Information, Polymarket is pushing for KYC (Know Your Customer) verification for traders to mitigate potential sanctions and legal risks. Meanwhile, some users are still trading through automated trading bots, Telegram tools, and grey market channels, making it increasingly difficult for the platform to avoid the question of who is actually making these trades.
In response to regulatory scrutiny, Polymarket emphasized cooperation and traceability. The platform stated that it has cooperated with US prosecutors and the CFTC, and asserted that blockchain transactions are transparent and traceable.
In this context, the Spagnuolo case serves as a signal. The risks of prediction markets are no longer just about "whether users can trade a certain event," but rather, as the market grows larger and traders become more complex, whether the platform can prove that the source of transactions, funding channels, and information can withstand scrutiny.
Polymarket can still tell the story of "trading probabilities," but regulators are asking a more specific question: behind the probabilities, who is actually trading, and what information are they trading with?
