CoinDesk
U.S. prosecutors in the Southern District of New York unsealed charges on Wednesday against Michele Spagnuolo, a Google security engineer accused of using internal company tools to trade on Polymarket contracts tied to Google's annual list of most-searched individuals. According to the complaint, signed by FBI Special Agent Brandon Racz, Spagnuolo transferred roughly $3.8 million in USDC to Polymarket and placed bets on outcomes he could preview through a confidential Google tool that tracks search-trend data. The account — operating under the username AlphaRaccoon — allegedly opened positions hours before public rankings were visible, including a bet that rapper D4vd would surface among the most-searched figures in late November, which lines up with a period when D4vd was charged with murdering a 14-year-old girl. Spagnuolo is alleged to have personally profited more than $1.2 million from the trades, then laundered proceeds through swaps, a privacy tool, and an Italian payment-processor account opened with his own government identification.
Why it matters
The case is the second high-profile insider-trading arrest linked to Polymarket in under a year, following the indictment of a U.S. Army soldier accused of betting on the Nicolas Maduro raid he was part of. Together they establish that prediction markets — long treated as off to the side of U.S. securities and commodities enforcement — are now squarely inside the wire-fraud, commodities-fraud, and money-laundering perimeter the DOJ uses against traditional exchanges. Spagnuolo faces commodities fraud, wire fraud, and money-laundering counts, a stack that signals prosecutors are comfortable treating on-chain event contracts as instruments covered by existing fraud statutes even though Kalshi and Polymarket have spent years arguing their products fall outside CFTC oversight.
Market impact
The headline for the prediction-market sector is regulatory rather than flow-based: a federal complaint treats Polymarket positions as the kind of "material nonpublic information" trades that already animate SEC and CFTC insider-trading doctrine.
Frequently asked questions
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Who is Michele Spagnuolo and what is he accused of?
Spagnuolo is a Google security engineer arrested and charged in the Southern District of New York. Prosecutors allege he used a confidential internal Google tool that tracks most-searched individuals to front-run Polymarket contracts tied to Google's annual rankings, personally profiting more than $1.2 million.
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How much money did the trades involve?
According to the complaint, Spagnuolo transferred roughly $3.8 million in USDC to Polymarket and personally profited more than $1.2 million across the trades. After winning, he allegedly routed 5 million USDC.e through a swap service and a privacy tool.
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What is the AlphaRaccoon account?
AlphaRaccoon is the Polymarket username flagged in the FBI complaint as the operator behind Spagnuolo's trades. Investigators say it placed positions hours before Google search-trend data became public, including a bet that rapper D4vd would surface among the most-searched figures in late November.
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What criminal charges does Spagnuolo face?
The complaint charges him with commodities fraud, wire fraud, and money laundering. He is alleged to have used material nonpublic information from his employer and then taken deliberate steps to obscure the source and ownership of the proceeds, including an Italian payment-processor account opened with his own ID.
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How does this case fit the broader Polymarket enforcement picture?
It is the second major insider-trading arrest tied to Polymarket in under a year, following the indictment of a U.S. Army soldier accused of betting on the Nicolas Maduro raid he was part of. Together the cases signal that DOJ is comfortable treating on-chain event contracts as instruments covered by existing fraud…
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