Polymarket trader accused of making $1.2M using Google insider data

U.S. authorities have charged a Google software engineer with insider trading tied to prediction markets, as federal regulators continue tightening scrutiny around Polymarket and other event-based trading platforms.

According to the U.S. Department of Justice, Google employee Michele Spagnuolo allegedly used confidential company information to place trades on Polymarket before Google publicly released its 2025 search trend rankings.

Prosecutors said the trades generated roughly $1.2 million in profit through a Polymarket account operating under the name “AlphaRaccoon.”

Court filings unsealed on Wednesday alleged that Spagnuolo placed 25 bets totaling about $2.7 million on markets linked to the most searched individuals on Google in 2025. Prosecutors claimed those bets targeted outcomes that Polymarket users had treated as unlikely before Google published the rankings in December.

Alongside the criminal case, the Commodity Futures Trading Commission filed a parallel civil complaint accusing Spagnuolo of insider trading violations in commodities markets. The agency said the case forms part of a growing enforcement focus on prediction-market activity involving confidential information.

Speaking in a statement released by the Justice Department, Manhattan U.S. Attorney Jay Clayton said the charges send a warning that “corporate insiders cannot use confidential business information to turn a profit in our markets.”

Federal agencies have recently intensified attention on insider trading risks tied to prediction markets. Earlier this year, seven members of the U.S. House of Representatives questioned why the CFTC had not acted more aggressively against suspicious trading linked to geopolitical event contracts involving Iran and Venezuela.

In their April letter to CFTC Chair Michael Selig, lawmakers described some event contracts as “morally obscene” and said trades tied to possible U.S. military actions raised concerns about the misuse of nonpublic information. The lawmakers also warned that weak oversight could damage confidence in the sector.

CFTC increases pressure on prediction markets

Separate statements from the CFTC have shown the agency moving toward a more aggressive enforcement approach. Enforcement Director David Miller said in April that insider trading laws apply to prediction markets and rejected claims circulating online that such activity falls outside existing rules.

Repeating that position on Wednesday, Miller said the enforcement division remains “a cop on the beat” for illegal use of inside information in prediction markets and other markets under the agency’s authority.

Federal prosecutors alleged that online users on Discord and X began suspecting in December that the AlphaRaccoon account belonged to a Google insider. According to court records, the account name was later changed to a wallet address after those discussions surfaced publicly.

Investigators also alleged that funds tied to the Polymarket account later moved through a decentralized crypto swapping platform and an unnamed transaction service that provides blockchain privacy protections.

The Justice Department charged Spagnuolo with commodities fraud, wire fraud, and money laundering. Prosecutors said the combined charges carry a maximum prison sentence of 50 years.

Meanwhile, the CFTC’s civil complaint seeks restitution, disgorgement, monetary penalties, and permanent trading and registration bans.

The case arrives as federal and state officials continue battling over who should regulate prediction markets in the United States. Earlier this month, the CFTC sued Minnesota after the state approved a law banning prediction-market activity from Aug. 1. The regulator argued that federally supervised event contracts fall under derivatives law rather than state gambling rules.

As previously reported by crypto.news, the White House Office of Management and Budget has begun reviewing a proposed CFTC rule for prediction-market contracts. The proposal reportedly follows a public consultation process that received more than 3,000 comments covering insider trading, market safeguards, and legal standards for event-based contracts.

Such debates have grown more urgent as platforms such as Polymarket and Kalshi face lawsuits and enforcement actions from several states, including Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and Minnesota.