U.S. federal prosecutors have charged a Google software engineer with commodities fraud, wire fraud, and money laundering, alleging he used confidential company data to make $1.2 million on the prediction markets platform Polymarket.
In a parallel action, the Commodity Futures Trading Commission (CFTC) filed a civil complaint accusing Michele Spagnuolo, an Italian citizen living in Switzerland, of insider trading in violation of the Commodity Exchange Act. Authorities say the case is part of a broader crackdown on illegal use of non-public information in prediction markets.
Alleged misuse of Google data on search trends
Court filings show that between October and December 2025, Spagnuolo used a Polymarket account under the name “AlphaRaccoon” to make 23 trades tied to Google’s “2025 Year in Search List.”
The contracts included wagers on outcomes such as the “#1 Searched Person on Google this year” and “Top 5 Most Searched People on Google 2025.” Prosecutors allege Spagnuolo accessed confidential internal data about search trends before it was publicly released and used that information to guide his trading strategy.
Authorities claim those trades generated roughly $1.2 million in profits, which they argue were illegally obtained because of his access to non-public business information.
Criminal charges and potential penalties
Spagnuolo was arrested in New York on Wednesday and later released on a $2.25 million bond. He did not enter a plea at that time.
He faces three federal counts:
- commodities fraud, with a maximum penalty of 10 years in prison
- wire fraud, with a maximum penalty of 20 years
- money laundering, with a maximum penalty of 20 years
The CFTC’s civil complaint seeks financial penalties, restitution, and a permanent ban on his participation in commodities trading, including prediction markets.
Google places engineer on leave, cites rule violations
A Google spokesperson said Spagnuolo has been placed on leave and that the company is cooperating with law enforcement.
The spokesperson added that the alleged conduct violated Google’s internal confidentiality and compliance policies, particularly rules governing access to marketing-related materials such as pre-release search lists and related data.
Polymarket says its systems flagged trades
Polymarket said in a public statement that its internal surveillance tools first detected the suspicious trading activity. The company said those findings formed the basis of a referral to federal authorities.
Polymarket noted this is the second case in which law enforcement has brought enforcement actions following its referrals, underscoring the role of platform-level monitoring in recent insider trading cases.
Part of a broader push into prediction market enforcement
The prosecution highlights how federal authorities are extending legal frameworks traditionally used for stock and futures markets to prediction platforms. The CFTC has stated that many of these contracts are treated as commodities transactions, making them subject to the same anti-fraud and anti-manipulation rules that govern more established markets.
By charging Spagnuolo with commodities fraud tied to prediction contracts, prosecutors are signaling that bets on non-public information in these markets will be treated similarly to insider trading in conventional financial instruments.
Recent case involving U.S. soldier and military intelligence
The Spagnuolo case follows another high-profile prediction market prosecution. Last month, federal authorities charged U.S. Army Master Sergeant Gannon Ken Van Dyke with using classified intelligence about a covert military operation to earn more than $400,000 on Polymarket.
Van Dyke allegedly placed trades on contracts linked to the capture of former Venezuelan President Nicolás Maduro, based on his involvement in planning and executing the mission. He has pleaded not guilty.
Taken together, the two cases suggest a pattern of enforcement targeting the use of privileged government and corporate information in prediction markets.
Platforms move to tighten rules and surveillance
Even before the latest charges, prediction markets had begun tightening their policies. In March 2026, Polymarket announced new market integrity rules explicitly banning trading based on stolen confidential information or illegal tips. The platform also said it enhanced its systems to detect abnormal trading patterns.
Competitor Kalshi has adopted similar measures, adding new technological safeguards and stricter internal controls. These moves appear aimed at anticipating potential congressional action and aligning more closely with regulatory expectations.
Data suggests wider pattern of suspicious activity
Concerns about the scale of potential misconduct are growing. A May 2026 report by a blockchain analytics firm identified a cluster of nine related Polymarket accounts that collectively earned more than $2.4 million, with a 98% win rate on military-related contracts.
Analysts say such performance is difficult to explain without access to non-public or privileged information, raising questions about systemic misuse of sensitive data across multiple accounts and events.
Rising volumes and growing regulatory scrutiny
Trading volumes on prediction platforms have surged. One major platform reported monthly volume of about $10.3 billion in April, up from $3.8 billion a year earlier. The growth has intensified regulatory scrutiny of how these markets operate and how they police abuse.
The House Committee on Oversight and Government Reform has launched an inquiry into Polymarket and Kalshi, seeking internal records on user verification, surveillance processes, and responses to anomalous trading patterns.
New legal risks for active market participants
For active traders, the cases mark a sharp escalation in legal risk. Authorities are signaling that using proprietary, non-public data from employers or other privileged sources to gain an edge on prediction platforms can trigger serious criminal and civil charges.
With platforms boosting surveillance and federal regulators openly looking to build precedent, participants are being warned to assume their activity is monitored and subject to the same standards that apply in traditional financial markets.
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