Google Insider Betting Case: The Trade Said to Turn Search Data Into $1.2M

Key Points

• Google software engineer Michele Spagnuolo was charged with using Google search trend data to place Polymarket bets, with more than $1.2 million in alleged profit through the account “AlphaRaccoon”.
• 2.7 million to 2.75 million in trades between October and December 2025, while changing positions as Google search data changed before the Year in Search report.
• The case has brought criminal and civil actions, raised pressure on prediction markets, and may shape how insider trading rules apply to blockchain forecast platforms.

A Google software engineer is accused of using company data to place winning bets on Polymarket. Authorities say those bets made more than $1.2 million before the information became public.

A Prediction Market Trade Gets Federal Attention

Federal prosecutors in the United States have charged Michele Spagnuolo, a 36-year-old Italian software engineer at Google. They say he used company information to place profitable trades on the prediction market platform Polymarket. Authorities say Spagnuolo used the online name “AlphaRaccoon”.

Prosecutors claim that the account made more than $1.2 million in profit. The trades were linked to Google’s annual “Year in Search 2025” rankings. Those rankings were not yet public when the trades were placed. Prediction markets are meant to reward correct forecasts. Investigators say this case involved information that normal users did not have. Public information shows Spagnuolo worked at Google for more than ten years.

His work focused on information security. Prosecutors describe him as an Italian citizen who has lived in Switzerland. Court records show he was arrested and taken before a federal judge in New York. Reports say he was later released on a $2.25 million bond. Authorities have repeated that the charges are still claims. Spagnuolo is presumed innocent unless a court proves guilt.

How Search Data Was Reportedly Used?

The claims focus on Google’s Year in Search report. That report gets attention because it shows search trends among users. Investigators say Spagnuolo had work access to information linked to the report before its release. Prosecutors claim he then used that access to buy event contracts on Polymarket.

Those contracts were tied to results that later appeared in Google’s rankings. According to the complaint, the trading took place from October to December 2025. Authorities say he did not rely on one prediction. Instead, they allege that positions changed again and again as Google search data moved. One example involves bets on the most searched person on Google in 2025. Prosecutors say Spagnuolo first bet that Kendrick Lamar would finish first.

Kendrick Lamar received attention after headlining the 2025 Super Bowl halftime show. Authorities claim the plan changed as Google data changed. Investigators say evidence started to show alt-pop singer D4vd becoming the top search trend. They claim this led to more trades that matched the updated information. One position mentioned in the complaint was among the most profitable. It involved betting that D4vd would become Google’s most searched person of the year.

At that time, Polymarket users gave that outcome a very low chance. Prosecutors also say several contracts were traded to predict who would appear in Google’s final rankings. They say other trades predicted who would not appear. When Google released the data on Dec. 4, authorities say the AlphaRaccoon account made large profits.

The Money Trail and Blockchain Checks

Investigators estimate that AlphaRaccoon made about 2.7million to 2.75 million in trades. Those trades were connected to Google search trends. As authorities reviewed the activity, they also looked at the cryptocurrency used for funding. Court filings say large stablecoin amounts went to Polymarket accounts. Those funds supported the trading activity.

Investigators also allege that later actions tried to make the profit trail harder to follow. Even with blockchain transactions, federal investigators say they connected the activity to Spagnuolo. The FBI reportedly followed cryptocurrency movements. It also linked trading accounts after finding one account opened with Italian identity documents.

Criminal Charges and Civil Action

The legal impact has moved beyond the trades. Federal prosecutors charged Spagnuolo with violating the U.S. Commodity Exchange Act. They also charged him with wire fraud and money laundering. U.S. Attorney Jay Clayton said the charges repeat an old message. Corporate insiders cannot use business information to make a profit in markets, he said.

Clayton also said insider trading harms market integrity. He added that the American people want such conduct investigated and prosecuted. At the same time, the Commodity Futures Trading Commission filed a civil enforcement action.

That action is linked to the same claims. Regulators say the conduct broke rules against using material non-public information. They say those rules apply in markets under the agency’s authority. The CFTC is seeking disgorgement of alleged profits. It also wants financial penalties, limits on trading, and other sanctions allowed by federal law.

Google and Polymarket Give Responses

As the investigation moved forward, Google and Polymarket said they were helping authorities. A Google spokesperson said the employee accessed marketing material through a tool available to all employees.

The spokesperson said using that information to place bets was a serious breach of company policies. Google also said it is cooperating with law enforcement. The company added that it will take appropriate action. Google has placed Spagnuolo on leave. It has also been said that further job decisions may follow as the legal process continues. Polymarket also confirmed that it helped investigators.

A company spokesperson said Polymarket worked closely with authorities. The spokesperson also said it is the only prediction platform so far whose cooperation led to insider trading charges in the United States. Polymarket added that blockchain trading is transparent and traceable. It also said bad actors leave footprints.

The platform has since changed its rules. Users are now clearly barred from trading contracts when they hold confidential information. They are also barred when they can influence the outcome of an event.

Why Prediction Markets Now Face More Pressure?

The case comes while prediction markets are growing fast. These markets have attracted billions of dollars in activity. Unlike gambling platforms, they let users buy and sell contracts linked to real-world outcomes. Prices change without pause. They reflect what users, as a group, think may happen.

Critics have warned that unfair access to information can create misuse. The claims against AlphaRaccoon have made those concerns stronger. Many prediction market contracts are linked to companies, governments, military groups, and other bodies. When someone gets sensitive information before the public, the edge can be large.

Last month, authorities charged a special forces soldier. They say he made more than $400,000 through Polymarket trades linked to the fall of former Venezuelan President Nicolás Maduro. Prosecutors alleged that classified information tied to a U.S. military operation gave him an information edge. At the same time, legal fights over prediction market control continue.

Regulators and state authorities keep debating consumer protection, market standards, and legal authority. The administration of President Donald Trump has supported prediction market operators. It has also challenged some state-level regulatory actions.

A Case That May Change Insider Trading Rules in Digital Markets

For decades, insider trading action has focused mainly on stocks, bonds, and securities markets. Prediction markets work in another way. Users trade probabilities, not ownership interests.

It may show how insider trading rules apply to blockchain-based forecast platforms.

Regulators, technology companies, fintech firms, and gaming operators are watching the case closely. The result could shape future compliance demands across the sector. These platforms are becoming more important sources of market forecasting.

Expert Analysis: What This Means for Operators and the Industry?

Prediction market operators are facing pressure to build surveillance systems like those used by financial exchanges. They need to monitor unusual trading activity.

They also need to spot information gaps and keep audit trails.

Technology companies face a growing concern. Internal information once seen mainly as a secrecy issue can carry value in outside prediction markets. Because of that, companies may need stronger access controls. They may also need better employee monitoring and clearer rules on market participation.

A third issue is possible law-making on how financial market rules apply to decentralised and blockchain forecast systems. The final result of this case could reach beyond Polymarket. It may become a benchmark for the next stage of digital market oversight.