U.S. prosecutors have charged Google software engineer Michele Spagnuolo with using confidential company data to trade on Polymarket before Google publicly released its 2025 search trend rankings. According to the Department of Justice, the trades were placed through an account named “AlphaRaccoon,” with total wagers of about $2.7 million and alleged profit of roughly $1.2 million.
Court filings unsealed on Wednesday said Spagnuolo placed 25 bets tied to markets on the most searched individuals on Google in 2025. Prosecutors said those positions targeted outcomes that Polymarket users had largely treated as unlikely before Google published the rankings in December.
Criminal charges and a parallel CFTC case
The criminal case is moving alongside a civil complaint from the Commodity Futures Trading Commission. The agency accused Spagnuolo of insider trading violations in commodities markets and said the matter is part of a broader enforcement push focused on the misuse of confidential information in prediction-market trading.
In a Justice Department statement, Manhattan U.S. Attorney Jay Clayton said the charges are meant to warn that corporate insiders cannot use confidential business information to make money in the markets. The Justice Department charged Spagnuolo with commodities fraud, wire fraud, and money laundering. Prosecutors said the combined counts carry a maximum prison sentence of 50 years.
The CFTC’s civil action seeks restitution, disgorgement, financial penalties, and permanent bans on trading and registration.
Prediction markets face tighter insider-trading scrutiny
The case lands at a time when U.S. regulators are paying closer attention to prediction markets. Earlier this year, seven members of the U.S. House of Representatives asked CFTC Chair Michael Selig why the agency had not taken a harder line against suspicious trading in geopolitical event contracts involving Iran and Venezuela.
In their April letter, the lawmakers described some event contracts as ��morally obscene” and said trades tied to possible U.S. military action raised concerns about the misuse of nonpublic information. They also warned that weak oversight could hurt confidence in the sector.
CFTC Enforcement Director David Miller said in April that insider-trading laws apply to prediction markets, rejecting online claims that such activity sits outside current rules. On Wednesday, he repeated that position and said the enforcement division remains “a cop on the beat” for illegal use of inside information in prediction markets and other markets under the agency’s authority.
AlphaRaccoon drew attention online before charges
Federal prosecutors also said users on Discord and X began suspecting in December that the AlphaRaccoon account belonged to a Google insider. Court records say the account name was later changed to a wallet address after those discussions became public.
Investigators further alleged that funds tied to the Polymarket account later moved through a decentralized crypto swapping platform and an unnamed transaction service offering blockchain privacy protections.
The case comes as federal and state authorities continue to fight over who should regulate prediction markets in the United States. Earlier this month, the CFTC sued Minnesota after the state approved a law banning prediction-market activity starting on Aug. 1. The regulator argued that federally supervised event contracts fall under derivatives law, not state gambling rules.
As previously reported, the White House Office of Management and Budget has started reviewing a proposed CFTC rule for prediction-market contracts. The proposal reportedly followed a public consultation that received more than 3,000 comments on insider trading, market safeguards, and legal standards for event-based contracts.
Pressure on the sector has widened as platforms including Polymarket and Kalshi face lawsuits and enforcement actions in Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and Minnesota.