NPR
A Google software engineer has been charged with leveraging confidential company data to generate $1.2 million in profits through trades on Polymarket. This case marks the second acknowledged federal criminal inquiry involving insider trading related to a prediction market platform.
Michele Spagnuolo, a 36-year-old Italian citizen residing in Switzerland, was taken into custody on Wednesday. He faces charges of commodities fraud, wire fraud, money laundering, and additional allegations for purportedly placing bets on search trends derived from internal Google data monitoring user searches.
According to the unsealed federal indictment, the prosecution states, "Unlike the counterparties to his trades, Spagnuolo knew the outcome of these wagers before the trading public did because he had accessed Google's confidential, commercially valuable internal data."
Operating under the pseudonym AlphaRaccoon, Spagnuolo allegedly made several bets related to Google's most-searched individual of 2025. He wagered nearly $1 million that Bianca Censori, Kanye West's wife, would not be the most-Googled person, and he placed over $600,000 in bets against Pope Leo XIV taking the top position. Furthermore, he made a bet predicting that the rapper D4vd would be the most-Googled individual, despite prevailing market sentiment suggesting a near-zero probability for this outcome at that time.
In total, Spagnuolo is reported to have wagered $2.7 million on 25 individual outcomes within the Google search market, reaping a profit of $1.2 million, as asserted by prosecutors.
The charging documents reveal that after transferring his winnings from his cryptocurrency wallet, Spagnuolo deleted the username AlphaRaccoon from his Polymarket account.
Additionally, the Commodity Futures Trading Commission (CFTC) has initiated a separate civil case against Spagnuolo for potential violations of commodities law.
Spagnuolo did not respond to requests for comments regarding the charges.
In a statement, Google expressed that it has cooperated with the federal investigation into Spagnuolo, who is currently on leave from the company. Google spokesperson Jaclyn Vazquez remarked, "The employee accessed our marketing material using a tool available to all employees, but using such confidential information to place bets is a serious breach of our policies."
Olivia Chalos, the chief legal officer of Polymarket, emphasized that her platform is the only prediction market to date whose cooperation has culminated in insider trading charges in the United States. She further noted that since users engage in trading with cryptocurrency, the platform ensures transparency and traceability, making it difficult for malicious actors to operate unnoticed.
While the regulatory framework governing the prediction market industry is less stringent than that of the stock market, the misuse of non-public confidential information for profit—typically referred to as "insider trading"—is illegal under federal statutes.
Users within prediction market communities, particularly on platforms such as Discord, often scrutinize unusual trading patterns and encourage others to mirror those bets. One user remarked, "AlphaRaccoon has alpha," referencing Spagnuolo's significant stakes in the market for the most-Googled individual before Google's information disclosure. Another user encouraged others to "Check AlphaRaccoon account" to inform their betting strategies.
Platforms like Kalshi and Polymarket have gained traction during President Trump's second term, allowing participants to bet on a myriad of subjects, including corporate announcements, geopolitical developments, election outcomes, and more.
In a notable incident last month, a master sergeant in the U.S. Army Special Forces was charged for using classified information related to the capture of Venezuelan leader Nicolás Maduro to amass over $400,000 on Polymarket.
The indictment against Spagnuolo was revealed a day after President Trump pledged on Truth Social to promote the growth of the prediction market industry by asserting federal regulators' "exclusive authority" over these contentious betting platforms. Administration officials have been embroiled in legal disputes with state officials concerning the regulatory oversight of the prediction market sector.
State regulators argue that these platforms resemble gambling operations and should adhere to state gambling regulations, whereas the Trump administration considers Polymarket and Kalshi to function as a variant of "futures contracts," thus falling under the jurisdiction of the Commodity Futures Trading Commission, which traditionally regulates markets related to commodities such as grain and oil.
Polymarket's predominant platform, situated in Panama, is technically off-limits to American users. It was compelled to cease its U.S. operations in 2022 following a settlement with federal authorities, which accused the platform of functioning without the necessary trading exchange license.
Two years later, the FBI conducted a raid on the residence of the company's founder, Shayne Coplan, as part of an investigation into whether Polymarket was breaching their settlement agreement. However, the Trump administration ultimately abandoned that investigation, and officials even invited Coplan to the White House for a cryptocurrency summit.
Donald Trump Jr., the president's eldest son, serves as an advisor to both Polymarket and Kalshi, and he is a partner in 1789 Capital, a significant investor in Polymarket.
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