Google employee faces insider trading charges over Polymarket bets

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Google employee insider trading

Highlights

U.S. authorities charged Google engineer Michele Spagnuolo for allegedly using unreleased Google internal data to place $2.7 million in Polymarket bets on 2025 search trends, generating $1.2 million in profits.
Spagnuolo faces commodities fraud, wire fraud, and money laundering charges with a possible 50-year prison sentence; the CFTC seeks restitution, disgorgement, penalties, and trading bans in a parallel civil action.
Congress launched a probe into Polymarket and Kalshi following these enforcement actions, intensifying regulatory scrutiny of prediction markets and event-driven platforms over insider trading risks.

Charges tied to 2025 search data bets

As reported by the U.S. Attorney for the Southern District of New York, authorities on Wednesday unsealed charges against Google software engineer Michele Spagnuolo, alleging he accessed unreleased internal information at Google and used it to place 25 bets worth $2.7 million on Polymarket markets related to the most searched individuals on Google in 2025.

Prosecutors say Spagnuolo controlled the Polymarket account "AlphaRaccoon," which generated $1.2 million in profit on outcomes the market viewed as unlikely when Google published its information on the most searched individuals in December. The Justice Department charges him with commodities fraud, wire fraud and money laundering, exposing him to a maximum sentence of 50 years in prison.

The CFTC filed a parallel civil complaint on Wednesday alleging similar insider trading conduct. In that action, the regulator is seeking restitution, disgorgement, civil monetary penalties, and bans on trading and registration.

According to court documents, users on Discord and X began discussing in December whether AlphaRaccoon belonged to a Google insider. Prosecutors also allege the account name was later changed to a wallet address, and that funds from the account were routed to a decentralized crypto swapping service and an unnamed transfer service offering privacy protections for blockchain transactions.

Prediction market oversight intensifies

Manhattan U.S. District Attorney Jay Clayton says in a statement that the charges reinforce a longstanding warning that corporate insiders cannot use confidential business information to profit in markets. CFTC enforcement director David Miller says the agency is acting as a market watchdog against illegal use of inside information in prediction markets and other markets under its jurisdiction.

The case emerges as prediction markets face broader examination in Washington. Congress launched a probe into Polymarket and Kalshi on Friday, questioning how the companies respond to suspected insider trading and whether government officials are using nonpublic information to place bets.

The enforcement action also follows an April case in which the Justice Department charged a U.S. soldier with allegedly using classified information to bet on the U.S. capture of former Venezuelan president Nicolas Maduro. Together, the cases are likely to deepen compliance pressure on event-based trading platforms operating around politically or commercially sensitive information.

Our earlier coverage of the White House review of a CFTC proposal on prediction markets explained how federal oversight of platforms like Kalshi and Polymarket is tightening as Washington weighs new rules. We also outlined the jurisdiction fight over whether the CFTC has exclusive authority or whether states can regulate these markets, a dispute that could ultimately be settled by the Supreme Court.

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