Michele Spagnuolo is accused of using internal Google data to place a $2.75 million bet, profiting $1.2 million on the Polymarket prediction marketplace.
U.S. federal prosecutors have indicted Michele Spagnuolo, a senior software engineer atGoogle , on charges of merchandise fraud, electronic fraud, and money laundering.
According to information released by the US Department of Justice, Spagnuolo, operating under the alias “AlphaRaccoon,” is accused of betting approximately $2.75 million on Polymarket contracts related to Google between October and December of last year, earning about $1.2 million in profit.
Alongside the criminal prosecution, the U.S. Commodity Futures Trading Commission (CFTC) also filed a civil lawsuit, seeking restitution, fines, and a permanent trading ban against the defendant.
With the second prosecution, the pressure on the administration is increasing.
Spagnuolo is accused of accessing an internal Google software tool that provides confidential, unpublicized Year in Search data—documents labeled “Google Confidential”—to guide bets. Google confirmed the employee has been suspended while the company considers disciplinary action, calling the use of confidential information for betting a “serious breach” of internal policy.
This is the second federal prosecution related to alleged insider trading on a prediction market, following the case in January where a U.S. soldier was accused of using classified military information to place bets on Polymarket related to the arrest of Venezuelan President Nicolás Maduro.
Tre Upshaw, founder of Polysights, considered this "ultimately a positive moment" for the prediction market as it demonstrated insider trading can be identified and prosecuted. However, he also cautioned platforms to increase proactive oversight instead of just reacting after damage has occurred, noting that while the anonymity of impersonation makes enforcement harder, it doesn't render traders invisible.
The series of prosecutions is fueling a wave of widespread regulation. Polymarket has updated its rules on prohibited conduct, while Kalshi has begun screening athletes and politicians. The states of New York, California, and Illinois have also taken steps to restrict public officials from using non-public information to transact on these platforms.
At the federal level, President Trump earlier this week supported the CFTC taking control of the forecasting market sector, rather than letting states set their own rules, a move that could reshape the entire regulatory framework for this rapidly growing segment.
