A Google engineer specializing in information security has been arrested and faces charges of fraud and money laundering. He’s accused of using secret company data to make winning bets on Polymarket, a cryptocurrency prediction market. By knowing the results in advance, he reportedly earned around $1.2 million.
On May 27, 2026, federal prosecutors in New York announced charges against Michele Spagnuolo, 36, who also goes by the online name “AlphaRaccoon.” Spagnuolo, a citizen of Italy who lives in Switzerland, was arrested in New York and appeared in court before Judge Sarah Netburn. He was released after posting a $2.25 million bond, with $1 million of that amount paid in cash, according to the Department of Justice. He has not yet entered a plea in the case.
How The Scheme Worked
The legal complaint reveals that Spagnuolo could access a private Google tool labeled “Google Confidential.” This tool showed him what people were searching for on Google in real time, including the information used to create Google’s yearly “Year in Search” report, according to the Justice Department.
Starting in May 2024, Spagnuolo joined Polymarket and started betting on predictions about who would be the most searched people on Google in 2025. These prediction markets were first introduced on Polymarket last fall, according to the legal complaint.
As a crypto investor, I’ve been following this case and it’s pretty wild. Apparently, this guy Spagnuolo moved around $3.8 million in USDC to a Polymarket account and started making bets. He wasn’t just guessing though – he placed a $381 bet that this artist d4vd would be popular on Google, and he correctly predicted a few other things, like whether certain people would rank high in searches and if Squid Game would be a top TV show. The prosecutors are saying this wasn’t luck; he somehow *knew* the outcomes of these events before the markets even closed, which is a big problem.
The Commodity Futures Trading Commission (CFTC) also filed a lawsuit against Spagnuolo, seeking to recover any profits he made and impose additional fines. Google stated that Spagnuolo had been put on leave and they were working with law enforcement. While the tool he used was available to all employees, Google emphasized that using private company information for betting was a serious violation of their policies, according to ABC News.
The Second Case In Thirty Days
As a crypto investor, I’m pretty concerned about this latest news. Another person, Spagnuolo, has been arrested for insider trading on Polymarket, which is the second case in just over a month! Back in April, they arrested a Master Sergeant, Van Dyke, who allegedly used secret military info about a planned operation to bet on Polymarket and made over $400,000. He’s claiming he didn’t do it, but it’s definitely making me think twice about the platform and the risks involved. It’s a bad look for crypto when these kinds of things happen.
According to Polymarket’s legal officer, Olivia Chalos, the company actively cooperated with both the US Attorney’s Office and the CFTC during the case involving Spagnuolo. Polymarket is the first prediction platform to have its cooperation result in insider trading charges in the US. Chalos also highlighted that because the platform uses blockchain technology, any illegal activity leaves a traceable record.
The prediction market industry is facing a turning point. With two federal arrests for insider trading happening within a month – one involving military secrets and the other company search data – alongside a congressional investigation into platforms like Polymarket and Kalshi, it’s clear regulators are increasingly focused on this space. The very technology that made these markets transparent for users – blockchain – is now helping prosecutors build their cases.
Cover image from Grok, ETHUSD chart from Tradingview
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2026-05-28 14:27