U.S. prosecutors have indicted a Google security engineer for allegedly using confidential internal data to profit from prediction market bets on Polymarket, marking a significant escalation in legal scrutiny of decentralized financial platforms. Michele Spagnuolo, 36, faces charges of commodities fraud, wire fraud, and money laundering after authorities say he earned over $1.2 million in illicit gains.
The Scheme: According to the criminal complaint, Spagnuolo exploited his access to a non-public internal tool that contained Google’s closely guarded “Year in Search” list for 2025. This compilation of the year’s most-searched people and topics is kept secret even from most employees to preserve the marketing impact of its annual release. Spagnuolo allegedly used an anonymous Polymarket account named AlphaRaccoon to place bets based on the advance knowledge. On October 14 and 20, 2025, he wagered $403 on Kendrick Lamar being the top-searched individual (market odds 3%) and $10,807 that Pope Leo XIV would not be number one (50/50 odds). He later checked the tool again on November 27 and saw that musician d4vd had taken the top spot. He then bet $381.12 on d4vd placing in the top five (18% odds) and a near-zero-probability $5 bet on d4vd as the absolute top-searched person. The largest bets were against well-known figures: $937,688 on Bianca Censori not being number one, $613,587 on Pope Leo XIV not, $509,149 on Donald Trump not, and $171,612 on Trump not making the top five. In total, AlphaRaccoon risked approximately $2.75 million across about 25 outcome bets.
Money Laundering and FBI Trace: Spagnuolo allegedly attempted to conceal the source of the funds by converting his winnings into various cryptocurrencies and routing them through a mixing service designed to erase transaction history. The FBI, however, traced each address and linked them back to the AlphaRaccoon wallet. He also transferred proceeds to a payment processing account in Italy.
Google’s Response: A company spokesperson stated, “We’re working with law enforcement on their investigation. 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.” This statement appears to conflict with the criminal complaint, which asserts that Year in Search data is restricted “to only a limited number of employees.” Spagnuolo has been placed on leave.
Why It Matters: This is the second major insider-trading case linked to Polymarket in 2026, following the arrest of a U.S. soldier who bet on a Venezuelan presidential operation. The consecutive actions signal that U.S. prosecutors are treating prediction markets with the same seriousness as traditional securities markets. For the cryptocurrency and DeFi sector, the indictment is a watershed moment—it demonstrates that blockchain-based platforms do not provide immunity from existing financial laws and could set a precedent for stricter oversight and compliance requirements. It also serves as a warning to tech employees who might access non-public data for trading on any platform.
