[legal]
A Google staff software engineer was charged on Wednesday, May 28, 2026 with federal crimes for allegedly using confidential internal company data to place roughly $2.75 million in bets on the prediction market platform Polymarket, the U.S. Department of Justice announced.
Michele Spagnuolo, who operated under the alias "AlphaRaccoon," faces charges of commodities fraud, wire fraud, and money laundering, according to a criminal complaint filed in the Southern District of New York. The Commodity Futures Trading Commission filed a parallel civil complaint the same day, seeking restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against Spagnuolo.
Prosecutors allege that Spagnuolo accessed a Google-internal tool containing "confidential, nonpublic Year in Search data" — material marked with a "Google Confidential" banner — and used that information to bet on Google-related contracts on Polymarket. The alleged scheme ran from October 15 to December 4, 2025. Spagnuolo allegedly won approximately $1.2 million on those bets, according to the DOJ complaint.
Google confirmed that the employee is on leave and described the alleged conduct as "a serious breach" of company policies. The company noted that Spagnuolo accessed the marketing material through a tool available to all Google employees, adding weight to the allegation that the insider edge came from knowing how to read internal data others could technically see but were not supposed to act on.
Polymarket did not distance itself from the case — the opposite. "Blockchain trading is transparent, traceable, and bad actors leave footprints," the platform said in a statement, framing the charges as evidence of its architecture's accountability rather than a vulnerability. The remark carries weight: Polymarket's on-chain structure made it possible to trace Spagnuolo's betting patterns in a way that off-chain financial activity might not allow.
This is the second federal prosecution for insider trading on a prediction market. The first involved a U.S. Army soldier accused of placing bets on Venezuela-related contracts using classified military intelligence; that defendant pleaded not guilty last month. Together, the two cases are establishing an emerging body of legal precedent around what was, until recently, an unregulated category of trading.
Tre Upshaw, an analyst at Polysights, called the Spagnuolo charges "a positive moment for prediction markets" precisely because prosecution is possible. "It shows insider activity can be identified and prosecuted," Upshaw said, pointing to a need for stronger market surveillance systems at prediction market platforms.
The regulatory backdrop is notably active. Polymarket has already updated its prohibited conduct policies. Kalshi, Polymarket's main U.S. rival, is screening athletes and politicians. Several states — New York, California, and Illinois — are moving to restrict public employees from trading on prediction markets. And President Trump this week publicly backed CFTC authority over the sector, calling state-level opponents of federal oversight "scum."
The SDNY complaint names three criminal counts. Commodities fraud carries a maximum sentence of 10 years per count. Wire fraud and money laundering each carry maximums of 20 years per count, though actual sentences depend on the specific facts and applicable guidelines. Spagnuolo has not entered a plea as of the date of this article.
The case draws a line that prosecutors have now drawn twice in rapid succession: information asymmetry that would be illegal in securities markets is illegal in prediction markets too. The DOJ's willingness to pursue it — and the CFTC's decision to file a simultaneous civil action — signals that regulators view the prediction market sector as firmly within their enforcement perimeter.
Sources: DOJ criminal complaint, SDNY, May 28, 2026 (https://www.justice.gov/usao-sdny/pr/google-employee-charged-insider-trading); CFTC civil complaint, May 27, 2026 (https://www.cftc.gov/media/14046/ENF_SpagnuoloComplaint052726/download); DOJ criminal complaint (https://www.justice.gov/usao-sdny/media/1442621/dl); Google statement; Polymarket statement.