US federal prosecutors have charged Google software engineer Michele Spagnuolo with fraud and money laundering, alleging he used confidential company data to make more than $1.2 million on Polymarket bets. The case, unsealed Wednesday in New York, marks another high-profile attempt to apply insider-trading principles to prediction markets.
What Happened
According to a criminal complaint filed in federal court in the Southern District of New York, Spagnuolo, a 36-year-old Italian citizen living in Switzerland, allegedly accessed internal information tied to Google’s 2025 Year in Search results and then traded on related Polymarket contracts before that information became public. Prosecutors said he carried out the trades through an account identified as “AlphaRaccoon.”
The complaint alleges that the total value of wagers reached about $2.75 million across several markets linked to the annual ranking of top search terms. One cited example says Spagnuolo correctly bet that indie pop artist d4vd would lead the list of most-searched people, and that the trade occurred only hours after he viewed confidential Google data. US authorities charged him with commodities fraud, wire fraud, and money laundering.
US Attorney Jay Clayton said the case sends a clear warning that insiders cannot exploit nonpublic corporate information for personal gain in market activity. Google said it is cooperating with law enforcement and described betting based on internal data as a serious violation of company rules. A company spokesperson said Spagnuolo has been placed on leave while the case proceeds.
Impact & Consequences
The prosecution could become a significant test of how aggressively US authorities police informational abuse in prediction markets, a sector that has expanded rapidly as users place high-volume bets on politics, economics, and real-world events. By framing the alleged conduct as commodities and wire fraud, prosecutors are signaling that market integrity standards can apply even when trading occurs outside traditional equities venues.
The case also places added compliance pressure on major technology firms whose employees may have early access to market-moving data not typically associated with stocks. For Google and similarly situated companies, the allegations underscore that internal information controls now carry risk beyond securities law, including potential criminal liability linked to event contracts. For platforms such as Polymarket, the matter highlights the dual challenge of growth and enforcement: attracting liquidity while proving they can detect and report suspicious activity quickly enough to satisfy regulators and law enforcement.
Background & Context
Prediction markets have increasingly drawn attention from regulators, legal scholars, and enforcement agencies as trading volumes rise and contracts reference sensitive outcomes, from elections to geopolitical events and corporate disclosures. Supporters argue these markets aggregate information efficiently, while critics warn they can create incentives to misuse privileged access or even interfere with underlying events.
The Spagnuolo case follows another recent criminal matter involving Polymarket. Last month, US authorities charged US soldier Gannon Ken Van Dyke, 38, with allegedly using classified military information to place bets related to the reported abduction operation targeting Venezuelan President Nicolás Maduro. Prosecutors in that case said Van Dyke made more than $400,000. Taken together, the two prosecutions suggest investigators are watching prediction-market activity more closely and are prepared to pursue criminal charges when they believe traders are profiting from protected information.
International Response
Polymarket said it worked closely with the US Attorney’s Office during the inquiry and stated that its cooperation helped produce what it described as the first US insider-trading-related charges tied to a prediction platform. The company added that it aims to keep markets accurate and transparent while enforcing internal rules and collaborating with regulators.
Although no formal statement has been issued by Swiss or Italian authorities in the material released with the complaint, the defendant’s residence and nationality may add a cross-border dimension as the case develops. Legal observers have noted that international employment and account structures can complicate evidence gathering, yet US prosecutors have increasingly pursued transnational financial misconduct when trades touch US-linked platforms, infrastructure, or enforcement jurisdictions.
What to Expect Next
The case is expected to move through federal court in New York, where prosecutors will seek to prove that Spagnuolo knowingly used nonpublic Google data to place and profit from event contracts. Immediate questions include how investigators traced account activity to the defendant and whether additional participants are identified. The outcome could help define future compliance standards for both global technology companies and prediction-market operators.
