Google Engineer Charged with Using Internal Data for Alleged $1.2M Polymarket Windfall
Federal authorities have charged a Google software engineer with insider trading for allegedly using confidential company data to profit on Polymarket. Michele Spagnuolo, 36, is accused of leveraging his high-level access to net over $1.2 million in illicit gains by trading on the outcome of Google’s annual search trends.
The scheme allegedly focused on Google’s “Year in Search” results for 2025. According to the DOJ and CFTC, Spagnuolo accessed the final rankings weeks before their public release, allowing him to execute strategic trades on related event contracts, while the rest of the market remained in the dark.
Spagnuolo, an Italian citizen residing in Switzerland, was arrested on Wednesday and brought before a federal magistrate in New York. This landmark case represents a major crackdown on information misappropriation within the decentralized forecast sector, signaling that regulators can monitor blockchain-based markets with the same intensity as traditional finance.
Exploiting the “Year in Search” Data
According to the federal complaint, Spagnuolo operated under the alias “AlphaRaccoon” to take positions on which figures would top Google’s 2025 rankings. Prosecutors allege he used an internal information-security tool to view non-public trends, discovering that indie pop musician d4vd was the most-searched person of the year.
While Polymarket traders assigned a “near-zero probability” to this outcome, Spagnuolo allegedly placed massive trades on the musician, turning a negligible stake into a million-dollar windfall once the results went public on December 4.
How “Anonymity” Failed the Decentralized Trader
Despite Polymarket’s decentralized nature, federal investigators successfully pierced the veil of Spagnuolo’s digital identity. According to the DOJ complaint, the FBI utilized a combination of blockchain analytics and corporate record subpoenas to link the “AlphaRaccoon” wallet to Spagnuolo’s personal devices.
Investigators allegedly tracked the movement of funds from the digital wallet to a bank account held in his name, and further verified his identity using the Italian government ID he provided during a mandatory Know Your Customer (KYC) check on a linked exchange.
SDNY: “Innovation is Not a Haven for Fraud”
Following the arrest, the U.S. Attorney for the Southern District of New York, Jay Clayton, emphasized that decentralized technology does not provide a shield for illegal activity.
In a statement, Clayton made it clear that federal law remains steadfast regardless of the marketplace: “Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets”.
“Prediction markets are not a haven for using misappropriated confidential or classified information for personal gain. This is clear insider trading and illegal under federal law.” – U.S. Attorney for the Southern District of New York, Jay Clayton
Federal Agencies Target Prediction Market Fraud
The CFTC’s parallel civil lawsuit emphasizes that the “misappropriation of confidential information” violates the Commodity Exchange Act. Authorities noted that Spagnuolo’s actions created a starkly unlevel playing field, as he knew the resolution of the markets before placing his positions.
“The law applies regardless of the technology used,” the CFTC stated, seeking permanent trading bans and significant financial penalties to deter others from using internal corporate “alpha” to manipulate public forecasts.