A Google software engineer has been charged with using confidential company information to amass $1.2 million through trades on the prediction market platform Polymarket. This incident marks the second federal criminal case linked to insider trading activities in the rapidly growing prediction market arena. The individual in question, 36-year-old Michele Spagnuolo, an Italian citizen residing in Switzerland, was arrested on Wednesday on various charges, including commodities fraud, wire fraud, and money laundering.
According to the federal indictment, Spagnuolo accessed internal data that tracked user searches to inform his bets on Polymarket. Prosecutors allege that, operating under the pseudonym “AlphaRaccoon,” he placed wagers predicting that a relatively obscure rapper, D4vd, would emerge as the most-searched person on Google in 2025. At the time of his bet, most other traders on the platform assigned a “near-zero probability” to this outcome, with the rapper even facing murder charges.
The indictment notes that after transferring his winnings out of his cryptocurrency wallet, Spagnuolo promptly removed the “AlphaRaccoon” username from his Polymarket account. Following these revelations, the Commodity Futures Trading Commission has initiated a separate civil case against him for alleged violations of commodities law. Spagnuolo has not publicly commented on the charges.
In a response to the situation, Google emphasized its cooperation in the federal investigation. Spokesperson Jaclyn Vazquez stated the employee had accessed marketing materials through a tool available to all staff but stressed that leveraging such confidential information for personal gain constitutes a severe breach of company policies.
Polymarket’s Chief Legal Officer, Olivia Chalos, pointed out that it is the first prediction platform in the U.S. whose collaboration with authorities has led to concrete insider trading charges. She highlighted the transparency inherent in cryptocurrency transactions, which can leave clear traces, making it difficult for malicious actors to evade consequences.
While regulations governing prediction markets differ from stock market rules, using non-public information for trading profit is considered illegal under federal statutes. Users in prediction market communities, particularly on platforms like Discord, have scrutinized trades for signs of abnormal betting patterns, often lending credence to the trader’s inside knowledge. Enthusiasts quickly gathered around Spagnuolo’s bold bets, with users referencing “AlphaRaccoon” for insights on successful wagering strategies.
The growth in popularity of prediction markets has surged during former President Trump’s administration, leading to gambling-like betting on various events, ranging from corporate announcements to geopolitical developments. As more people chase profits in diverse areas, online analysts have begun identifying patterns that imply insider knowledge, with some traders pulling in profits exceeding six or seven figures.
This recent indictment follows another case involving a U.S. Army Special Forces master sergeant, who allegedly used classified information regarding the capture of Venezuelan leader Nicolás Maduro to gain over $400,000 on Polymarket.
The scrutiny surrounding the prediction market industry has intensified, with President Trump recently expressing his intention to permit its growth while delineating federal regulators’ authority over these platforms. The Trump administration is embroiled in a legal battle with state officials regarding the regulation of prediction markets, with states arguing these sites should comply with gambling regulations. In contrast, the administration views these operations as futures contracts governed by the Commodity Futures Trading Commission—a body typically overseeing traditional commodity markets.
Polymarket, which operates from Panama, had already ceased its U.S. operations under a settlement with federal authorities in 2022 due to licensing issues. Just two years later, the FBI conducted a raid on the company’s founder, Shayne Coplan, as part of an investigation into potential violations of that settlement, which was later dismissed. Notably, Trump’s administration previously extended an olive branch to Polymarket’s founders, inviting them to the White House for discussions on cryptocurrency—a connection further emphasized by Donald Trump Jr.’s advisory role and investment ties to the platform.
