Google engineer charged over Polymarket trades with search data

Federal prosecutors charged Google software engineer Michele Spagnuolo with commodities fraud, wire fraud and money laundering, alleging he used confidential Google search data to profit on Polymarket. Authorities say the trades generated about $1.2 million in proceeds and that he risked roughly $2.75 million.\n\nThe complaint alleges Spagnuolo accessed internal search-ranking lists labeled ‘Google Confidential’ for the 2025 Year in Search and used that nonpublic information to buy and sell prediction-market contracts tied to the most searched person and the top five searched people of 2025. Prosecutors say the trades were placed through a Polymarket account named ‘AlphaRaccoon’ between Oct. 15, 2025, and Dec. 4, 2025.\n\nThe U.S. Department of Justice charged Spagnuolo, 36, an Italian citizen living in Switzerland. The criminal counts carry maximum sentences of 10 years for commodities fraud and up to 20 years each for wire fraud and money laundering.\n\nInvestigators traced the AlphaRaccoon account to cryptocurrency wallets that prosecutors say funded the Polymarket positions and received the trading proceeds.\n\nThe Commodity Futures Trading Commission filed a parallel civil complaint seeking restitution, disgorgement, civil penalties, trading and registration bans, and a permanent injunction. The CFTC filing frames the matter as an example of how insider-trading rules can apply to prediction markets when event contracts rely on nonpublic business information.\n\nCFTC Chairman Michael S. Selig wrote in a statement, ‘The Commission will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform that is used.’\n\nThe complaints say the Polymarket contracts were settled using USDC.e, a bridged stablecoin pegged 1:1 to the U.S. dollar, with winning shares paying $1 and losing shares paying $0. Polymarket has since made Polymarket USD (pUSD), a Polygon ERC-20 token backed 1:1 by USDC, its primary collateral token.\n\nU.S. Attorney Jay Clayton wrote in a statement, ‘Corporate insiders cannot use confidential business information to turn a profit in our markets.’\n\nAuthorities are pursuing criminal penalties through the DOJ and civil relief through the CFTC, including monetary penalties and trading or registration bans. If convicted in the criminal case, Spagnuolo could face prison time and financial penalties; the civil action could result in disgorgement of trading gains and restrictions on future participation in regulated markets.\n\nPolymarket operates event-based prediction markets where participants buy and sell contracts tied to real-world outcomes. The complaints assert that conventional fraud and insider-trading laws can apply to activity that uses distributed-ledger technology or stablecoins as settlement rails.