A Google security engineer has been arrested for allegedly using internal search data to place winning bets on Polymarket, U.S. prosecutors say — a case that spotlights how centralized insider information can warp decentralized prediction markets. What happened - Michele Spagnuolo, a Google security engineer, was arrested after a complaint unsealed by the U.S. Attorney’s Office for the Southern District of New York alleged he used “material nonpublic information” to trade on Polymarket markets tied to who would appear on Google’s list of most-searched-for people for 2025. Those markets launched on Polymarket last fall. - According to the complaint, signed by FBI Special Agent Brandon Racz, Spagnuolo used an internal Google tool that showed which individuals were trending and then placed bets through a Polymarket account using the handle “AlphaRaccoon.” - Prosecutors say Spagnuolo transferred roughly $3.8 million in USDC to a Polymarket address and that the account placed bets on contracts including one predicting that rapper D4vd — who has recently been charged with murdering a 14-year-old girl — would be among the most-searched people in late November. Authorities say Spagnuolo viewed Google’s internal data showing D4vd trending a few hours before AlphaRaccoon placed the wager. Alleged laundering and movement of funds - The complaint says the AlphaRaccoon account moved 5 million USDC.e from Polymarket to a wallet, then routed funds through a swapping service and a privacy tool in an apparent attempt to obscure the origin and ownership of proceeds. - Some funds were ultimately transferred to an account at an Italian payment processor that prosecutors say was opened using Spagnuolo’s government ID. - U.S. officials allege Spagnuolo “personally profited more than approximately $1,200,000” and then took steps to conceal those proceeds. Charges and regulatory action - Spagnuolo is charged in the criminal complaint with commodities fraud, wire fraud and money laundering. - The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action after the Department of Justice complaint, seeking monetary disgorgement, restitution and other penalties tied to the trades. Google response - Google said it is cooperating with law enforcement. The company noted the employee accessed marketing material via a tool available to all employees but said using confidential information to place bets violates company policy. Google has placed the employee on leave and said it will take appropriate action. Why this matters for crypto and prediction markets - This is the second high-profile arrest linked to alleged insider trading on Polymarket; earlier, U.S. authorities charged a U.S. Army soldier who allegedly bet on a raid he participated in that targeted Venezuelan leader Nicolás Maduro. - The case raises questions about how off-chain, privileged information can be exploited to profit on on-chain or web-based prediction markets, and it highlights that regulators and criminal prosecutors view some prediction-market activity as falling within commodities and fraud enforcement. - It also underscores the practical limits of “decentralization” when user behavior, off-chain tooling and KYC’d fiat touchpoints can create traceable trails and legal exposure. Updates - (May 27, 2026, 22:30 UTC): Google statement and context added. - (May 28, 2026, 01:22 UTC): CFTC complaint referenced. As regulators sharpen focus on crypto-native products and prediction markets, this case will be watched closely by traders, exchanges and compliance teams — a reminder that access to privileged data can convert a speculative bet into a federal crime. Read more AI-generated news on: undefined/news