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A Google security engineer has been charged with commodities fraud, wire fraud, and money laundering after allegedly using confidential internal data from his employer to win big on Polymarket. Federal prosecutors say Michele Spagnuolo pocketed more than $1.2 million in profits by betting on prediction markets with information nobody else had access to.
The charges, filed by the US Attorney’s Office in the Southern District of New York, represent the second known federal criminal case involving insider trading on a prediction market platform. The first involved a US Army soldier.
What actually happened
Spagnuolo, a 36-year-old Italian citizen living in Switzerland, worked as a Staff Information Security Engineer at Google. According to prosecutors, he used the alias “AlphaRaccoon” while trading on Polymarket.
The alleged scheme centered on Google search trend data. Polymarket introduced markets tied to Google search trends in late 2025, allowing users to bet on which topics would trend in search. Spagnuolo allegedly had access to Google’s internal, confidential data on user search behavior.
Prosecutors say he exploited that asymmetry to consistently place winning bets, generating over $1.2 million in profits. He was charged on May 27, 2026, and released the same day on a $2.25 million bond.
The charges carry serious weight. Commodities fraud alone brings a potential sentence of up to 10 years. Wire fraud and money laundering each carry maximums of 20 years. Spagnuolo faces all three.
Why prediction markets are suddenly a legal minefield
Traditional securities law has well-established frameworks for prosecuting insider trading on stocks and bonds. Prediction markets, which technically trade event contracts classified as commodities, occupy newer legal territory. The fact that prosecutors are bringing commodities fraud charges signals that regulators view these platforms through the same lens as conventional financial markets.
For Polymarket specifically, the timing is awkward. The platform had been expanding its market categories aggressively, including the Google search trend markets that Spagnuolo allegedly exploited. That expansion created new surface area for insider trading that didn’t exist before late 2025.
What this means for prediction market traders and investors
For traders, the “AlphaRaccoon” alias didn’t provide anonymity when the FBI came knocking. Blockchain-based platforms create permanent, traceable records of every transaction, which makes them easier to investigate than many traditional trading schemes.
The category of markets most exposed is the kind Spagnuolo allegedly exploited: markets tied to proprietary data from specific companies. Google search trends, app store rankings, streaming viewership numbers are all areas where a relatively small number of company insiders have advance knowledge of outcomes.
The $2.25 million bond suggests prosecutors view Spagnuolo as a flight risk, which makes sense given his residence in Switzerland and Italian citizenship.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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