Google Fires Engineer for Alleged Insider Bets on Polymarket AI Predictions
Alphabet Inc. (NASDAQ: GOOGL) has fired senior security engineer Michele Spagnuolo after an internal investigation revealed he allegedly placed about $2.7M in bets on the crypto prediction platform Polymarket using confidential company information, earning approximately $1.2M in profits from October to December 2025.
Federal prosecutors have charged him with commodities fraud, wire fraud, and money laundering, and the Commodity Futures Trading Commission (CFTC) has also taken action, marking the first case involving a major tech employee and insider trading via crypto prediction markets.
This case signifies a shift in how US authorities view Polymarket event contracts, now treated as commodity derivatives under traditional anti-fraud laws. Polymarket, built on the Polygon blockchain, allows users to buy and sell binary outcome contracts but operates offshore without CFTC registration, which has created a regulatory gray area.
The CFTC previously fined Polymarket $1.4M in 2022 and forced it to close non-compliant markets, setting a precedent now being applied to individual cases like Spagnuolo’s, highlighting a compliance gap in corporate trading policies regarding decentralized prediction platforms.
Mechanics of the Alleged Conduct: How Spagnuolo Allegedly Converted Confidential Google Search Data Into $1.2M in Polymarket Profits
THE DOJ JUST CHARGED A GOOGLE ENGINEER FOR USING COMPANY SECRETS TO WIN $1.2 MILLION ON POLYMARKET.
His name is Michele Spagnuolo. His username on Polymarket was “AlphaRaccoon.”
Here is what he allegedly did.
Between October and December 2025, Spagnuolo wagered $2.75… pic.twitter.com/4kg2tMw4vX
— Crypto Jargon (@Crypto_Jargon) May 31, 2026
Court filings allege that Spagnuolo accessed confidential internal search-trend data through a restricted Google marketing tool and used that information to place at least 16 transactions on Polymarket under the alias “AlphaRaccoon.”
The data pertained to Google’s “Year in Search 2025,” giving him an edge on outcome contracts linked to prominent figures like Kendrick Lamar. Prosecutors claim he placed significant bets immediately after accessing this dataset, which is a key part of their case.
To hide his winnings, he allegedly funneled them through multiple crypto wallets not directly linked to his name, resulting in a money-laundering charge. The FBI traced the AlphaRaccoon wallet to Spagnuolo via an associated wallet linked to an Italian identity.
Spagnuolo, a 36-year-old Italian national living in Switzerland and former Google employee, was arrested in New York and released on a $2.25M bond. The transparency of Polymarket’s blockchain ultimately undermined the anonymity it offers.
Legal and Regulatory Framework: CFTC Jurisdiction Over Prediction Markets, the Insider Trading Doctrine, and Why This Case Is Structurally Novel
The Spagnuolo prosecution operates outside the Securities Exchange Act of 1934, as Polymarket event contracts are not equity securities under SEC jurisdiction.
Instead, the government is using commodities fraud statutes to classify Polymarket’s contracts as commodity derivatives under CFTC authority.
This marks the first time the government is applying this theory to an individual trader in a corporate insider context.
Former SEC chair Jay Clayton emphasized that insider trading undermines market integrity, arguing that corporate insiders cannot profit from confidential information on any market, including crypto platforms.
Additionally, wire fraud and money laundering charges offer prosecutorial flexibility, as wire fraud requires only the use of electronic communications to commit fraud, which is supported by the account structure involved.
The CFTC’s civil action will proceed under a lower evidentiary standard, potentially setting a binding definition of insider trading for event contracts that could apply to similar platforms.
This case follows an enforcement trend established in April 2026, when Gannon Ken Van Dyke was charged for allegedly using classified information to profit on Polymarket, extending this logic from government secrets to corporate ones.
CFTC Rulemaking on Prediction Market Insider Conduct, Google Policy Updates, Polymarket KYC Implementation, and Spagnuolo’s Arraignment
The CFTC civil action is a key focus for market participants and compliance professionals. A ruling deeming the use of material non-public corporate information to predict market-event contracts a violation of commodities law could set a precedent affecting platforms like Kalshi.
Attention should focus on whether the CFTC will issue formal guidance or allow case law to develop through the Spagnuolo litigation.
In terms of corporate governance, companies like Google, Microsoft, Meta, and Amazon may need to update employee trading restriction policies to include prediction market activities, especially after the Spagnuolo case highlights potential legal exposure. Delaying such updates could hinder their argument for good-faith governance if new cases arise.
Lastly, watch for how Polymarket responds to this regulatory environment, as its current offshore structure and onboarding process may come under scrutiny. The Van Dyke and Spagnuolo cases could signal a shift in federal enforcement and lead to new rulemaking.
The author does not hold or have a position in any securities discussed in the article. All prices were quoted at the time of writing.
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