The US Department of Justice has charged Michele Spagnuolo, a 36-year-old Italian Google software engineer, with using insider information to place bets on the prediction market Polymarket, earning $1.2 million in profits. The complaint, unsealed on Wednesday, alleges that Spagnuolo exploited confidential data from Google's most-searched list to wager on long-shot candidates.
According to the complaint, Spagnuolo, using the account name 'AlphaRaccoon', placed niche bets such as on indie musician D4vd, who was charged with murder last year, appearing on Google's most-searched list. The market had assigned a 'near zero probability' to this outcome, making Spagnuolo's bet highly profitable. He also bet on rapper Kendrick Lamar topping the list in October, based on internal Google data showing Lamar was on track to be the most-searched person of the year.
Spagnuolo's arrest follows a similar case last month, where a US army soldier was charged with using classified information to place Polymarket bets on military action in Venezuela. These cases highlight growing concerns over insider trading in prediction markets, which have become a multibillion-dollar industry. Federal agencies are scrutinising how to regulate these platforms and prosecute misuse of confidential information.
Jay Clayton, US attorney for the southern district of New York, stated that prosecutors will pursue corporate insiders who use confidential business information for profit in prediction markets. 'Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted,' he said.
Google confirmed it is cooperating with law enforcement and placed Spagnuolo on leave, calling the use of confidential information for betting a serious policy breach. Polymarket said it assisted in the investigation and noted it is the only prediction platform whose cooperation has led to insider trading charges in the US.
