U.S. authorities have charged a Google software engineer with insider trading linked to prediction market platform Polymarket, as regulators increase pressure on event-based trading platforms.
According to the U.S. Department of Justice, Google employee Michele Spagnuolo allegedly used confidential company data to place trades before Google publicly released its 2025 search trend rankings.
Prosecutors said Spagnuolo used a Polymarket account called “AlphaRaccoon” to place 25 bets worth around $2.7 million on prediction markets related to the most searched people on Google in 2025. Authorities claim the trades generated nearly $1.2 million in profit.
Court documents released on Wednesday said the bets focused on outcomes that most Polymarket users believed were unlikely before Google officially published the rankings in December.
At the same time, the Commodity Futures Trading Commission (CFTC) filed a separate civil case accusing Spagnuolo of insider trading violations tied to commodities markets. Regulators said the case is part of a wider effort to crack down on the misuse of confidential information in prediction markets.
Manhattan U.S. Attorney Jay Clayton said the charges send a clear message that corporate insiders cannot use private company information to make money in financial markets.
Federal regulators have recently increased their focus on insider trading risks connected to prediction platforms. Earlier this year, several members of the U.S. House of Representatives questioned why the CFTC had not acted more aggressively against suspicious trading linked to geopolitical event contracts involving countries such as Iran and Venezuela.
Lawmakers warned that weak oversight could hurt trust in the growing prediction market industry.
The CFTC has also taken a tougher public stance in recent months. Enforcement Director David Miller said insider trading laws fully apply to prediction markets and rejected claims that such activity falls outside existing regulations.
Investigators said online users on Discord and X began suspecting in December that the AlphaRaccoon account belonged to someone inside Google. According to court records, the account name was later changed to a wallet address after those discussions became public.
Authorities also claimed that funds connected to the account later moved through a decentralized crypto swapping platform and another blockchain privacy service.
The Justice Department charged Spagnuolo with commodities fraud, wire fraud, and money laundering. Prosecutors said the combined charges could carry a maximum prison sentence of 50 years.
Meanwhile, the CFTC is seeking financial penalties, repayment of profits, and permanent trading bans.
The case comes as federal and state authorities continue fighting 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 Aug. 1.
At the same time, the White House Office of Management and Budget is reviewing a proposed CFTC rule for prediction-market contracts following a public consultation process that received thousands of comments about insider trading, market protections, and legal standards.
Platforms such as Polymarket and Kalshi are also facing lawsuits and regulatory action from several U.S. states, including Nevada, New Jersey, Maryland, Ohio, Montana, Illinois, and Minnesota.
