Google Engineer Charged With Insider Trading on Polymarket

A Google software engineer has been arrested and charged with commodities fraud, wire fraud, and money laundering for allegedly using confidential internal company data to place winning bets on the prediction market platform Polymarket [1]. Prosecutors allege that 36-year-old Michele Spagnuolo utilized his access to Google’s marketing materials to gain an unfair advantage in wagers regarding the platform's most-searched person of 2025 [1].

Key takeaways

• Michele Spagnuolo, a Google engineer, allegedly placed 25 bets totaling $2.7 million, resulting in $1.2 million in profit [1].
• The defendant reportedly used internal Google data to predict that the singer D4vd would be the most-searched person of 2025 [2].
• Polymarket stated it cooperated with the U.S. Attorney’s Office and the Commodity Futures Trading Commission (CFTC) regarding the investigation [2].
• This marks the first time a tech worker has been arrested for alleged insider trading on a prediction market platform [2].

Allegations of Data Misuse

Spagnuolo, who has worked at Google since 2014 and was based in Zurich, Switzerland, allegedly operated under the username "AlphaRaccoon" [2]. According to the criminal complaint, he placed his trades between October and December 2025 [2]. Investigators claim that while other traders were guessing, Spagnuolo possessed knowledge of the outcomes before they were public because he accessed confidential, commercially valuable internal data [2]. A Google spokesperson confirmed that the employee accessed marketing material via a tool available to staff, noting that using such information for betting is a "serious breach of our policies" [1].

The arrest follows a referral from Polymarket, which has faced increasing scrutiny from lawmakers regarding illegal activity on its platform [2]. House Committee on Oversight and Government Reform chairman James Comer recently launched an investigation into prediction markets, requesting information from Polymarket on how it vets its customers [2]. Polymarket’s deputy chief legal officer, Olivia Chalos, stated that the platform is committed to transparency and that its blockchain-based trading allows for the tracking of bad actors [2].

Regulatory Scrutiny and Market Risks

The case against Spagnuolo is the second federal criminal charge involving prediction markets in recent months, following the April arrest of a U.S. Army soldier for betting on classified information regarding the capture of Venezuelan leader Nicolás Maduro [1]. In a parallel action, the CFTC filed a civil complaint against Spagnuolo for insider trading [2].

The industry has seen rapid growth, with combined monthly trading volume on platforms like Kalshi and Polymarket rising from less than $5 billion in September 2025 to approximately $24 billion by April 2026 [1]. As these markets expand, they face significant regulatory uncertainty. Unlike traditional stock markets, prediction markets lack established insider trading rules, and the IRS has not issued formal guidance on how winnings should be taxed [1]. Furthermore, data analysts suggest that up to 70% of participants in these markets lose money, highlighting the high-risk nature of treating these platforms as investment vehicles [1].