A federal insider-trading case is drawing fresh scrutiny to prediction markets after a Google software engineer allegedly profited more than $1 million by betting on a search result he had advance access to.
Michele Spagnuolo, a 36-year-old Italian citizen, joined Alphabet (NASDAQ: GOOG) unit Google in 2014 and was charged in a complaint unsealed Wednesday in New York federal court.
He appeared before a federal magistrate and was released on a $2.25 million bond, while his lawyer declined to comment on the charges.
Prosecutors allege Spagnuolo had access to company data tracking user searches when he placed bets that singer D4vd would become Google’s most-searched person in 2025.
At the time, Polymarket assigned a near-zero probability to D4vd topping figures such as Pope Leo XIV and Kendrick Lamar, according to prosecutors.
When D4vd was publicly announced as Google’s top-ranked search in December, Spagnuolo allegedly collected around $1.2 million from his Polymarket positions.
Google said the employee accessed marketing material through a tool available to all employees, describing the alleged use of confidential information for betting purposes as a serious policy breach.
The company placed Spagnuolo on leave and said it is working with law enforcement in connection with the matter.
The Commodity Futures Trading Commission filed a parallel civil lawsuit seeking civil penalties and the return of alleged illicit profits alongside the criminal complaint.
Prosecutors said Spagnuolo traded under the username AlphaRaccoon and allegedly used a crypto privacy service after online users began questioning the account’s Polymarket activity.
Polymarket has said it is strengthening insider-trading detection through work with Chainalysis, Palantir (NASDAQ: PLTR), and TWG AI in response to concerns about platform integrity.
The case may keep regulatory focus on offshore market structures, identity verification checks, and whether prediction platforms can expand in the U.S. without attracting tougher government oversight.
For prediction-market operators already navigating a complex regulatory environment, the charges represent another potential pressure point as both regulators and investors watch how platforms manage insider-trading risk going forward.
