Federal prosecutors charged a Google employee with commodities fraud, wire fraud, and money laundering, alleging he used confidential company data to trade on Polymarket prediction markets.
Michele Spagnuolo, a staff software engineer at Google who used the alias “AlphaRaccoon,” allegedly bet about $2.75 million across Google-related Polymarket contracts between October 15 and December 4 last year, according to the U.S. Department of Justice. Spagnuolo allegedly won about $1.2 million from those predictions.
Spagnuolo allegedly had access to a Google internal software tool that provided access to “confidential, nonpublic Year in Search data” and bore a “Google Confidential” banner, according to the DOJ’s criminal complaint.
The U.S. Commodity Futures Trading Commission has also filed a parallel civil complaint, alleging Spagnuolo violated the Commodity Exchange Act and seeking restitution, disgorgement, civil penalties, trading and registration bans, and a permanent injunction.
Spagnuolo accessed marketing material through a tool available to all Google employees, a company spokesperson told Decrypt, adding that using confidential information to place bets was “a serious breach” of company policies. He has been placed on leave as the company weighs “appropriate action.”
This is the second federal prosecution tied to alleged prediction market insider trading. Late last month, a U.S. soldier pleaded not guilty to charges that he used classified military information to profit from Polymarket bets related to events involving then Venezuelan President Nicolás Maduro.
“Blockchain trading is transparent, traceable, and bad actors leave footprints,” a Polymarket spokesperson told Decrypt.
The case is “ultimately a positive moment for prediction markets” because it shows insider activity can be identified and prosecuted, said Tre Upshaw, founder of Polysights, an intelligence and strategy layer for prediction markets. Using material, nonpublic information “to trade against everyone else” is a market integrity issue whether it happens on a stock exchange, a regulated event market, or an on-chain prediction market, Upshaw noted.
“Pseudonymity makes enforcement harder, but it does not make traders invisible,” Upshaw said, adding that platforms need stronger surveillance and insider risk controls, “instead of only reacting after the damage is done.”
Prediction market firms had already begun tightening rules ahead of the recent federal charges. Polymarket updated its prohibited conduct rules, while Kalshi began screening athletes and politicians after lawmakers questioned markets tied to government actions and outcomes known in advance. State governments including New York, California, and Illinois had also moved to draw clearer rules around who can trade on event outcomes.
Source: Google Engineer Charged With Using Confidential Data for $2.75M Polymarket Bets