In a new-age insider trading case, a Google software engineer has been accused of using company data to bet millions on prediction market Polymarket, where visitors can bet on everything from Paul Thomas Anderson’s Oscar to international conflicts. Michele Spagnuolo, an Italian software engineer living in Switzerland, is accused of using his position at the company to bet $2,754,092 on Google’s “Year in Search” data. Accused of wire fraud, money laundering and commodities fraud, the charges against Spagnuolo could carry up to 50 years in prison. Spagnuolo was arrested and charged in federal court in New York last week. A civil complaint from the Commodity Futures Trading Commission was also filed against the Google engineer.
In a statement announcing the criminal complaint, U.S. Attorney Jay Clayton said, “Today’s charges reinforce a decades-old message: Corporate insiders cannot use confidential business information to make profits in our markets.” » Clayton alleged that Spagnuolo “used Google’s confidential trading information to make more than $1.2 million in trading profits on Polymarket. Insider trading undermines the integrity of our markets, and the American people want this greed-motivated conduct to be investigated and prosecuted.”
Prediction markets have witnessed a slew of high-profile cases in recent months. In April 2026, the DOJ indicted Army Master Sgt. Gannon Ken Van Dyke uses inside information to bet on the kidnapping of Venezuelan President Nicolas Maduro. Other suspicious cases involve congressional elections, presidential pardons and presidential announcements. A disgraced congressman is under investigation for betting on his own appearance. Some experts have called this phenomenon an existential crisis for a booming industry. Others argue that this trend is essential to market business models. Given that prediction sites are embedded in everything from news broadcasts to financial apps like Google Finance, these concerns are paramount.
Catch a Clairvoyant AlphaRacoon
According to the court’s criminal complaint against Spagnuolo, the 36-year-old software engineer used Google’s internal software tool to access his Year 2025 data in search in October and November 2025. Using this confidential information, Spagnuolo allegedly bet $2,754,092 on 25 Google Year in Search results under his Polymarket account, “AlphaRaccoon.” The scheme reportedly generated an improbable profit of $1.2 million.
Spagnuolo’s downfall began with position X and is endemic to both the difficulty of controlling prediction markets and the collective efforts to control them. Since Polymarket accounts do not require identification, Spagnuolo’s activity was completely anonymous. However, like cryptocurrency platforms, all transactions are publicly recorded via their blockchain. This dichotomy, in which trades are publicly visible even though the identities of traders remain private, has given rise to a cottage industry of Internet market prediction research. One of these online sleuths, blockchain engineer and prediction market enthusiast Haeju Jeong, was the first to notice Spagnuolo’s suspicious trading history. Noting that “AlphaRacoon” scored 22 out of 23 in its predictions, Jeong concluded in an X article that “AlphaRacoon” was “a Google insider who exploited Polymarket for quick money.” According to the complaint, Spagnuolo’s Polymarket username was “quickly removed” after speculation began circulating online.
By withdrawing his winnings from Polymarket, Spagnuolo further obscured his identity through a series of cryptocurrency exchange and transfer services. As with prediction market betting, crypto transactions are typically recorded via public wallet identification numbers, which allowed the FBI to map the trail of Spagnuolo’s cryptocurrency money. Eventually, the FBI discovered Spagnuolo’s identity by tracking this digital record to payment processor Nexo, where the Google employee opened an account using his Italian ID card.
Crisis or fatality?
Insider trading can threaten the survival of prediction markets. According to Kalshi, America’s largest prediction market, insider trading investigations surpassed their 2025 totals in the first quarter of 2026 (via ABC). Examples ranged from Survivor results to Israeli missile strikes. In May 2026, data analytics firm Bubblemaps discovered that nine interconnected accounts made $2.4 million from 80 bets on U.S. military actions in Iran with 98% accuracy (via CBS). The political and military issues are particularly worrying. Although Polymarket is banned in the United States, users easily circumvent the rules using VPNs and cryptocurrencies. More than a billion dollars would have been bet on military actions in 2026, in particular on the fate of the American aviator in Iran in April.
Prediction markets are difficult to control. Subject to less regulation than Wall Street or online gaming platforms, prediction markets are regulated by the Commodity Futures Trading Commission (CFTC). The Trump administration has taken a hands-off approach, reducing the CFTC’s staff by 25 percent, filling only one of the commission’s five seats, and suing states that attempt to regulate the industry. And if pushing for regulation has been a bipartisan endeavor, so have efforts to hamstring enforcement.
Prediction market leaders say they are prioritizing cracking down on insider trading. However, it is fair to question the industry’s commitment. In interviews, Polymarket founder Shayne Coplan has called insider trading an “inevitability” that “creates a financial incentive to get people to disclose information to the market.” This confirms Coplan’s position that prediction markets are “truth machines”, where anonymized and free market principles operate freely. However, these statements highlight the central role of insider trading in the perceived value of the sector. The big question may not be whether prediction markets can stop insider trading, but rather whether they aim to do so.
