Charges indicate the second significant arrest linked to insider trading on a prediction market.
On Wednesday, U.S. authorities revealed that Michele Spagnuolo, a security engineer at Google, has been arrested and charged for allegedly engaging in insider trading by placing bets on Polymarket regarding trending Google search queries.
The complaint, made public by the U.S. Attorney's Office for the Southern District of New York, claims that Spagnuolo exploited "material nonpublic information" to wager on who would be among the most-searched individuals in 2025, following the launch of these betting markets by Polymarket last fall.
Using an internal Google tool, Spagnuolo is accused of tracking the most-searched individuals and subsequently transferring approximately $3.8 million in USDC to a Polymarket wallet, according to the complaint signed by FBI Special Agent Brandon Racz.
Operating under the username "AlphaRaccoon," Spagnuolo allegedly placed a bet that D4vd, a rapper recently charged with the murder of a 14-year-old girl, would rank among the most-searched individuals in late November. The complaint states that Spagnuolo accessed Google's internal data showing D4vd's rising trend just hours before placing the bet.
Furthermore, the account known as AlphaRaccoon transferred 5 million USDC.e from its Polymarket account to a personal wallet, later routing the funds through a swapping service and privacy tool. Ultimately, some of this money was transferred to a payment processor in Italy, with the account holder using Michele Spagnuolo's government ID for verification.
The complaint asserts, "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." It further notes that Spagnuolo gained over $1,200,000 from these trades based on nonpublic information and took steps to hide his illegal gains by obscuring their source and ownership.
Spagnuolo faces charges of commodities fraud, wire fraud, and money laundering.
This incident marks the second significant arrest of an individual accused of trading on Polymarket using insider information, following a previous case involving a U.S. Army soldier who allegedly placed bets related to a raid involving Nicolas Maduro.