Google Engineer Charged Over $2.75 Million in Alleged Polymarket Insider Trading Bets

Federal prosecutors have charged a Google employee with commodities fraud, bank fraud and money laundering, alleging that confidential data was used to trade on Polymarket’s prediction markets.

Michele Spagnuolo, a software engineer at Google who used the alias “AlphaRaccoon,” allegedly wagered about $2.75 million on Google-related Polymarket contracts from Oct. 15 to Dec. 4 last year, the U.S. Department of Justice said revealed Wednesday. Spanuolo would have won approximately $1.2 million from the predictions.

Spagnuolo allegedly had access to an internal Google software tool that provided access to “confidential, non-public Year in Search data” and carried a “Google Confidential” banner, the DOJs criminal complaint reads.

The U.S. Commodity Futures Trading Commission has also filed a parallel civil complaintalleging that Spagnuolo violated the Commodity Exchange Act and seeking restitution, disgorgement, civil penalties, trading and registration bans, and a permanent injunction.

The case is the second federal prosecution related to alleged insider trading in the prediction market.

Late last month, an American soldier pleaded not guilty against accusations that he used classified military information to profit from Polymarket betting related to the arrest of then Venezuelan President Nicolás Maduro, then the US strikes launched about Venezuela in January.

“Blockchain trading is transparent, traceable, and bad actors leave footprints,” a Polymarket spokesperson said Declutter in response to questions about fairness and rules.

Spagnuolo had access to marketing materials through a tool available to all Google employees, a company spokesperson said Declutteradding that using confidential information to place bets was “a serious breach” of company policy. He has been placed on leave as the company considers “appropriate measures,” the spokesperson confirmed.

A ‘positive moment’

Prediction markets are platforms that allow users to bet on the outcome of future events, with contract prices moving as traders buy and sell based on what they think will happen.

The case is “ultimately a positive moment for prediction markets” because it shows that insider activity can be identified and prosecuted, Tre Upshaw, founder of Polysights, an intelligence and strategy layer for prediction markets, told me. Declutter.

Using material, non-public information “to trade against anyone” is a matter of market integrity, whether it happens on a stock exchange, a regulated events market or an on-chain prediction market, Upshaw noted.

“Pseudonymity makes enforcement more difficult, but does not make traders invisible,” Upshaw said, adding that platforms need stronger oversight and controls over insider risk, “rather than reacting only after the damage has been done.”

Such concerns have already prompted platforms and state governments to create clearer rules on who can trade on event outcomes, ahead of the recent federal indictments.

Prediction market companies had already done that moved to tighten the rules against insider trading. Polymarket updated its prohibited conduct rules, while Kalshi began screening athletes and politicians for lawmakers questioned markets related to government actions and known outcomes.

State governments such as New York, California and Illinois have done so as well moved to prevent government employees from using non-public information to trade in prediction markets. Officials in the states said federal regulators had not set clear enough standards for the industry.

Earlier this week, President Donald Trump supported CFTC controls the prediction markets and says state officials are not allowed to regulate the industry.