Federal prosecutors charged a Google staff software engineer on May 28, 2026 with using confidential company data to place $2.75 million in allegedly illegal bets on Polymarket prediction markets — the second federal prosecution tied to prediction market insider trading in a month.
Michele Spagnuolo, who traded under the alias "AlphaRaccoon," faces charges of commodities fraud, wire fraud, and money laundering brought by the U.S. Department of Justice's Southern District of New York. Prosecutors allege Spagnuolo won roughly $1.2 million from the trades.
According to the DOJ's criminal complaint, Spagnuolo accessed an internal Google software tool bearing a "Google Confidential" banner that provided nonpublic "Year in Search" data — information available to all Google employees but not to the public. He allegedly used that data to trade Polymarket contracts tied to Google-related outcomes between October 15 and December 4, 2025.
The U.S. Commodity Futures Trading Commission filed a parallel civil complaint the same day. The CFTC is seeking restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction under the Commodity Exchange Act.
The case is the second federal prediction market insider trading prosecution in a month. Late last month, a U.S. soldier pleaded not guilty to charges that he used classified military information to profit from Polymarket bets tied to the capture of then Venezuelan President Nicolás Maduro following U.S. strikes on Venezuela in January.
The back-to-back cases arrive as the sector faces growing regulatory scrutiny. Polymarket has updated its prohibited conduct rules; Kalshi began screening athletes and politicians after lawmakers raised concerns about markets tied to government-held information. New York, California, and Illinois have moved to restrict public employees from trading on prediction markets using nonpublic information. Earlier this week, President Trump backed CFTC jurisdiction over the sector, calling state-level regulators out of bounds.
Google confirmed Spagnuolo accessed the internal marketing tool — available to all employees — but said using that data to place bets constitutes "a serious breach" of company policy. The company has placed him on leave while it weighs further action.
Industry observers framed the prosecution as a net positive. "Blockchain trading is transparent, traceable, and bad actors leave footprints," a Polymarket spokesperson told Decrypt. Tre Upshaw, founder of prediction market intelligence firm Polysights, called the case "ultimately a positive moment for prediction markets" because it demonstrates that insider activity can be identified and prosecuted. Upshaw added that platforms need stronger surveillance and insider risk controls "instead of only reacting after the damage is done."
Sources: DOJ press release · DOJ criminal complaint · CFTC civil complaint