Federal prosecutors have charged Google engineer Michele Spagnuolo with using internal search data to place $2.7 million in bets on Polymarket, resulting in $1.2 million in illicit profits.

Key Points

• Michele Spagnuolo, a 36-year-old Google security engineer, allegedly used the handle "AlphaRaccoon" to trade on non-public Google Year-in-Search data.
• Spagnuolo placed 25 bets on Polymarket, including a high-stakes position on singer D4vd, netting a total profit of $1.2 million.
• The Southern District of New York charged Spagnuolo with commodities fraud, wire fraud, and money laundering.
• The Commodity Futures Trading Commission (CFTC) has filed a parallel civil case against the engineer.
• This marks the second federal criminal prosecution involving Polymarket, following a previous case involving a U.S. soldier.
• Polymarket is currently facing increased regulatory scrutiny, including a probe by the U.S. House Oversight Committee and recent platform bans in Spain and India.

Why it Matters

This case represents a significant expansion of insider-trading enforcement into the prediction-market sector by applying commodities-fraud statutes to derivative contracts. It challenges the platform's claims of market robustness and invites further regulatory pressure on how prediction markets handle non-public information.