Google Engineer Charged with Insider Trading on Polymarket
In brief
- Justice Department charged Google engineer Michele Spagnuolo with insider trading on Polymarket, profiting $1.2 million using non-public Google search data.
- Spagnuolo placed 25 bets worth $2.7 million on markets related to most-searched individuals under username AlphaRaccoon.
- CFTC filed parallel complaint seeking restitution, disgorgement, civil penalties, and trading bans. Spagnuolo faces maximum 50-year prison sentence.
- Congress launched probe into Polymarket and Kalshi over insider trading incidents involving government officials betting on prediction markets.
The charges
Spagnuolo faces charges of commodities fraud, wire fraud, and money laundering. He could face a maximum sentence of 50 years in prison. The CFTC filed a parallel complaint with similar allegations of insider trading.
Prosecutors said Spagnuolo placed 25 bets worth $2.7 million on markets related to the most searched individuals on Google in 2025. The bets profited $1.2 million. His Polymarket account, AlphaRaccoon, operated from September through December 2024.
Communities on Discord and X began discussing the possibility that AlphaRaccoon was a Google insider in December. Soon after, the username was allegedly changed to a wallet address. Prosecutors alleged that funds from the account were sent to a decentralized crypto swapping service and a privacy-focused transfer service.
Regulatory response
Manhattan US District Attorney Jay Clayton said in a statement that the charges "reinforce a decades-old message: Corporate insiders cannot use confidential business information to turn a profit in our markets."
The CFTC seeks restitution, disgorgement, civil monetary penalties, and trading and registration bans against Spagnuolo. The charges come as Congress launched a probe into Polymarket and Kalshi over insider trading incidents on the platforms, with lawmakers concerned that government officials are using insider knowledge to make bets.
This case follows a previous Justice Department charge against a US soldier in April, who allegedly used classified information to place bets on the US capture of former Venezuelan president Nicolás Maduro. The pattern reflects growing scrutiny of prediction markets as enforcement agencies move to close gaps in insider trading oversight.
