A Google engineer allegedly used confidential search data to win $1.2 million betting on Google’s own year-end rankings

Michele Spagnuolo had access to something most Polymarket traders didn’t: Google’s own internal data showing which names were about to go viral. Federal prosecutors say he used it to place $1.2 million worth of winning bets, under the pseudonym “AlphaRaccoon.”

The U.S. Department of Justice announced on May 27 that Michele Spagnuolo, a 36-year-old Google employee and Italian citizen living in Switzerland, allegedly used confidential internal Google data to place profitable bets tied to Google’s “Year in Search” rankings on the blockchain-based platform Polymarket. Prosecutors allege the trades generated roughly $1.2 million in profits between October and December 2025.

The case is drawing attention not only because it involves one of the world’s largest technology companies, but because it may become a landmark prosecution tied directly to Prediction Market insider trading an area regulators and lawmakers have increasingly warned could become vulnerable to abuse as prediction platforms grow in popularity.

How prosecutors say the prediction market insider trading scheme worked

According to court documents unsealed in Manhattan federal court, prosecutors allege Spagnuolo used access to internal Google tools marked “Google Confidential” to monitor search trend data before it became public. Authorities say he then used the information to place high-stakes trades under the pseudonym “AlphaRaccoon.”

The contracts reportedly centered on which individuals would appear on Google’s most-searched lists for 2025. One of the most scrutinized wagers involved musician D4vd, who unexpectedly became one of the year’s most-searched figures after being linked to a high-profile criminal investigation. Prosecutors say the market had assigned “near-zero probability” to that outcome before the data became public.

Federal investigators allege Spagnuolo transferred millions of dollars in cryptocurrency-linked assets into Polymarket-related accounts while executing at least 16 trades tied to nonpublic information.

“As alleged, Spagnuolo violated the duties he owed to his employer and used Google’s confidential business information to make more than $1.2 million in trading profits on Polymarket,” — Jay Clayton, U.S. Attorney for the Southern District of New York.

The charges include commodities fraud, wire fraud, and money laundering. Prosecutors say the case represents a broader effort to crack down on Prediction Market insider trading as event-based contracts become more mainstream.

Google and Polymarket respond to prediction market insider trading allegations

Google confirmed the employee had been placed on leave while the company cooperates with investigators.

“The employee accessed our marketing material using a tool available to all employees, but using such confidential information to place bets is a serious breach of our policies,” — Google spokesperson.

Polymarket, meanwhile, said it worked alongside federal authorities during the investigation. The platform emphasized that it prohibits insider trading and monitors suspicious activity on-chain.

“Blockchain trading is transparent, traceable, and bad actors leave footprints,” — Polymarket spokesperson.

“We are committed to maintaining accurate, fair, and transparent markets as well as enforcing our rules and working with our regulators and law enforcement.”

The company’s cooperation is notable because prosecutors described it as one of the first cases in which a prediction platform directly assisted investigators pursuing Prediction Market insider trading charges in the United States.

The controversy arrives at a moment when regulators are already facing pressure to define how prediction platforms should operate under U.S. financial law. Some lawmakers argue that markets based on politics, entertainment, economics, and real-world events increasingly resemble speculative financial instruments rather than simple forecasting tools.

Why the case could reshape oversight of prediction markets

Legal analysts say the prosecution may establish an important precedent for how authorities approach Prediction Market insider trading in decentralized and crypto-linked financial systems.

Prediction platforms such as Polymarket and Kalshi have grown rapidly over the past two years, attracting traders interested in betting on elections, celebrity outcomes, economic data, and geopolitical developments. But critics argue that these systems create opportunities for individuals with privileged information to exploit public markets before information becomes widely available.

The Google case follows growing political pressure in Washington. Earlier this month, House Oversight Committee Chairman James Comer requested records from prediction market operators amid concerns over insider activity and market manipulation.

Researchers have also begun studying how insider information may move through decentralized event markets. A recent academic paper examining Polymarket transactions found patterns consistent with informed trading activity across several high-profile events.

For federal prosecutors, the Google investigation appears intended to send a wider message: insider information laws apply even when the trades are tied to unconventional markets.

The complaint alleges that the engineer used internal company knowledge to gain an unfair advantage in a financial ecosystem built around public uncertainty. If prosecutors succeed, the case could become a defining moment in the legal treatment of Prediction Market insider trading and a warning to employees with access to sensitive corporate data.