A Google information-security engineer was arrested on May 27, 2026 and charged with commodities fraud, wire fraud, and money laundering after allegedly using confidential internal Google data to place winning bets on Polymarket — the crypto prediction market — netting roughly $1.2 million by acting on outcomes before the public. What happened - The U.S. Attorney’s Office for the Southern District of New York unsealed a complaint against Michele Spagnuolo, 36, also known on Polymarket as “AlphaRaccoon.” An Italian citizen living in Switzerland, Spagnuolo was arrested in New York, appeared before U.S. Magistrate Judge Sarah Netburn, and was released on a $2.25 million bond secured by $1 million in cash. He did not enter a plea at his initial appearance. - Prosecutors say Spagnuolo had access to a Google internal tool — marked “Google Confidential” — that showed near-real-time search activity across Google, including the raw data that feeds the company’s annual “Year in Search” rankings. Armed with that privileged visibility, the complaint alleges, he placed a string of Polymarket wagers starting in May 2024 on who and what would appear in Google’s most-searched lists for 2025. Alleged trades and funds - According to the complaint, Spagnuolo transferred about $3.8 million in USDC to his Polymarket address and used that capital to back several contracts. Examples cited include a $381.12 “yes” bet that artist d4vd would rank on Google’s most-searched list, as well as correct calls on markets such as “Will Zohran Mamdani rank in the Top 5 most searched” and “Will Squid Game be the number one searched TV show.” - Investigators contend his unusually high success rate was no accident: he allegedly knew the answers before the public markets settled. Regulatory and corporate response - The Commodity Futures Trading Commission (CFTC) filed a parallel civil enforcement suit seeking disgorgement, restitution, and penalties. The coordinated criminal and civil actions show federal authorities treating on-chain prediction-market activity as squarely within their enforcement remit when insider information is involved. - Google confirmed it has placed Spagnuolo on leave and is cooperating with law enforcement. The company said the tool in question was technically available to employees but stressed that using confidential internal information for trading violated policy and was being treated as a serious breach. - Polymarket’s chief legal officer, Olivia Chalos, said the platform worked closely with the U.S. Attorney’s Office and the CFTC, highlighting that the blockchain-based structure of Polymarket leaves traceable records that aided investigators. Polymarket noted that its cooperation helped lead to insider-trading charges — a first for a prediction platform in the U.S., per the company’s statement. Bigger picture: an accelerating enforcement trend - The Spagnuolo case is the second federal insider-trading prosecution tied to Polymarket in about a month. In April 2026, U.S. Army Special Forces Master Sergeant Gannon Ken Van Dyke was arrested for allegedly using classified knowledge about a planned operation involving Venezuelan President Nicolás Maduro to place Polymarket bets, reportedly winning more than $400,000; he has pleaded not guilty. - Those two arrests, together with an active congressional probe into Polymarket and rival Kalshi, signal that regulators and prosecutors are rapidly tightening scrutiny of prediction markets. The very transparency of blockchain transaction records — once pitched as a benefit to users — is now functioning as a forensic trail for federal enforcement. Why this matters to crypto markets - For market operators, the cases underline the need for robust compliance controls, cooperation with authorities, and careful thinking about how off-chain confidential information can interact with on-chain markets. - For traders and institutions, the prosecutions demonstrate that conventional insider-trading and money-laundering statutes can be applied to crypto-native prediction markets when participants allegedly exploit nonpublic information. The Spagnuolo matter will likely play out across criminal and civil dockets, and could shape how prediction markets and their users are regulated and policed going forward. Cover image credit: Grok; ETHUSD chart: TradingView. Read more AI-generated news on: undefined/news