Michele Spagnuolo allegedly traded under the handle ‘AlphaRaccoon’, netting $1.2m on Google’s Year-in-Search outcomes. It is the second federal criminal case tied to Polymarket.
Federal prosecutors in the Southern District of New York have charged Michele Spagnuolo, a 36-year-old Google information-security engineer based in Switzerland, with using internal Google search-trend data to bet $2.7m on Polymarket and profit $1.2m on the prediction-market platform’s 2025 Google Year-in-Search contracts.
The case, announced on Tuesday, is the second federal criminal prosecution connected to trading on Polymarket and the first in which the misappropriated information comes from inside a major Silicon Valley platform.
The mechanics are unusually specific. Polymarket ran a market in late 2025 on who would top Google’s Year-in-Search list, the company’s annual recap of the most-searched terms and people.
Spagnuolo, prosecutors allege, used an internal Google tool to access non-public search-trend data and then placed 25 separate bets on the market under an account named “AlphaRaccoon.”
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He bet nearly $1m that Kanye West’s wife Bianca Censori would not finish top, more than $600,000 that Pope Leo XIV would not finish top, and a meaningful position on the singer D4vd to finish top at a price Polymarket had set at near-zero probability.
D4vd won when Google announced the results on 4 December 2025. Spagnuolo’s AlphaRaccoon account profited $1.2m. He subsequently removed the AlphaRaccoon name from his Polymarket account and moved his winnings out of the associated cryptocurrency wallet.
The charges are commodities fraud, wire fraud and money laundering. The Commodity Futures Trading Commission has brought a parallel civil case.
The SDNY filing, supported by the FBI investigation, is the most concrete public application yet of US securities-style insider-trading law to a prediction-market trade.
The legal framing is novel because Polymarket’s event contracts are regulated by the CFTC as derivatives rather than by the SEC as securities; insider-trading liability has historically attached most readily to the securities regime.
Prosecutors have got around that by using the commodities-fraud statute, which applies to manipulation across any CFTC-regulated market.
The Spagnuolo case lands inside a Polymarket regulatory squeeze that has been visibly tightening for weeks.
The US House Oversight Committee, chaired by James Comer, opened a probe last Friday into how Polymarket and Kalshi customers might be using non-public information to trade.
Spain blocked both platforms entirely on Tuesday on gambling-licence grounds. India formally blocked Polymarket on 21 May.
A US soldier was charged earlier this year with using inside information to bet on Venezuelan political outcomes, netting roughly $400,000, in what was until Tuesday the only public criminal Polymarket case.
The Spagnuolo charges make it two, and the prosecution has elevated significantly: a senior Silicon Valley engineer rather than a single soldier.
The Polymarket side of the story is the part the company will be working through internally. Polymarket founder Shayne Coplan pushed back publicly on the broader insider-trading framing of the Comer probe on Tuesday, arguing that the platform’s pricing dynamics are robust to small numbers of informed traders.
Whether that argument survives the Spagnuolo prosecution is the open commercial question. The Year-in-Search market specifically was reportedly small enough that a $2.7m position was visible inside the order book; Polymarket’s surveillance team has not publicly explained why the position was not flagged before the December 2025 results.
Spagnuolo was arrested in Switzerland and is reported to be cooperating with the extradition process. Google has not yet commented on whether it intends to bring civil action of its own against the former employee.
