Federal Prosecutors Charge Google Engineer With Insider Trading on Prediction Markets
DOJ establishes new precedent treating aggregated search data as material non-public information in first prosecution targeting early access to trend analytics.
Federal prosecutors charged Michele Spagnuolo, a 36-year-old Google security engineer, with insider trading after he generated $1.2M in profits on Polymarket using confidential Year in Search data accessed weeks before public release. The charges, unsealed 27 May in the Southern District of New York, mark the first time aggregated trend data—distinct from individual user information—has been prosecuted as material non-public information under commodities and wire fraud statutes.
The Mechanics of the Scheme
Between October and December 2025, Spagnuolo accessed Google’s internal Year in Search data marked ‘Google Confidential’ and placed bets under the username ‘AlphaRaccoon’ on 25 separate outcomes, according to the DOJ indictment. His most profitable wager: placing $600,000 that indie musician d4vd would be the most-searched artist—a bet trading at near-zero probability on Polymarket before the data’s public release.
Spagnuolo also bet approximately $1M that Bianca Censori would NOT be the most-searched person and $600,000 that Pope Leo XIV would NOT top the search rankings, per NPR. The FBI complaint details how he accessed the data using tools available to all Google employees, but the material itself carried confidentiality restrictions limiting its distribution.
“Unlike the counterparties to his trades, Spagnuolo knew the outcome of these wagers before the trading public did because he had accessed Google’s confidential, commercially valuable internal data.”
— Federal Indictment, US Attorney’s Office SDNY
After generating over $1M in winnings, Spagnuolo attempted to obscure the proceeds by transferring approximately $3.8M USDC to privacy-enhancing cryptocurrency services, then moving funds to an Italian payment processor opened with his government identification, CoinDesk reported. He deleted his AlphaRaccoon account name in December 2025 after public suspicion emerged on the platform.
Legal Precedent and Enforcement Coordination
The charges—commodities fraud, wire fraud, and money launering—represent unprecedented application of Insider Trading doctrine to aggregated data analytics. Prosecutors must establish that Google’s Year in Search trends constitute “property” under Title 18 wire fraud statutes and that Spagnuolo’s early access created exploitable information asymmetry on a CFTC-regulated market.
This is the second major prediction market prosecution in two months. In April 2026, the DOJ charged Army Special Forces soldier Gannon Ken Van Dyke with using classified military intelligence about a Venezuela operation to generate over $400,000 in Polymarket profits. The parallel timing signals coordinated enforcement strategy between the DOJ and CFTC, with CFTC Enforcement Director David I. Miller stating his division is “a cop on the beat in policing the illegal use of inside information in prediction markets,” per ReadWrite.
The CFTC filed a separate civil complaint for fraud and manipulation alongside the criminal charges. Polymarket, which paid a $1.4M CFTC fine in 2022 for operating an unregistered derivatives exchange, claims it “is the only prediction platform to date whose cooperation has led to insider trading charges in the United States,” according to Bloomberg. The platform announced a partnership with Chainalysis in April 2026 for blockchain analytics detection.
Implications for Data-Rich Platforms
The prosecution forces fundamental questions about when aggregated user behavior crosses into insider information territory. Google’s internal classification of Year in Search data as confidential marketing material now carries legal weight under federal commodities law—a standard that could apply to any platform with proprietary trend analytics.
Google placed Spagnuolo on leave, stating that “using such confidential information to place bets is a serious breach of our policies,” per a company spokesperson quoted by Bloomberg. The company noted the employee accessed marketing material using tools available to all staff, suggesting the issue lies in usage rather than access controls—a distinction prosecutors reject.
The charges arrived one day after President Trump vowed prediction markets would “thrive” under federal CFTC authority, rejecting state gambling regulators’ jurisdiction claims. The administration views these platforms as futures contracts under CFTC purview, not state-regulated gambling. This federal-state battle has intensified since Polymarket blocked US users in 2022, though VPN circumvention remains widespread.
US Attorney Jay Clayton framed the prosecution in traditional insider trading terms: “Corporate insiders cannot use confidential business information to turn a profit in our markets. Insider trading compromises the integrity of our markets,” he stated in the DOJ announcement.
Legal analysis from Sidley Austin notes prosecutors must establish that aggregated search trends constitute “property” under wire fraud statutes—a higher bar than traditional securities cases involving earnings data or merger plans. The outcome will determine whether all major platforms must redesign employee data access policies and implement trading blackout periods around marketing campaigns.
What to Watch
Spagnuolo’s trial will establish whether aggregated trend data legally constitutes material non-public information—a ruling with immediate implications for Meta, Amazon, Netflix, and any platform generating proprietary user behavior analytics. Every tech company with early access to product launch data, engagement metrics, or search trends now faces Compliance risk.
The CFTC’s aggressive enforcement posture suggests further prosecutions targeting employees at financial data providers, social media platforms, and e-commerce companies. Compliance teams should expect guidance on mandatory disclosure requirements, trading blackout periods, and restricted data classifications within months.
Polymarket’s cooperation with federal prosecutors positions the platform as the enforcement ally in an industry facing regulatory legitimacy questions. Whether this strategy insulates the company from future enforcement or simply establishes a compliance standard competitors must match remains unclear. The federal-state jurisdiction battle continues, with the Trump administration’s CFTC preference potentially preempting state gambling regulators—but only if prediction markets can demonstrate they operate with securities-grade market integrity.