An Italian software engineer employed by Google used his access to the tech giant’s internal traffic data to manipulate outcome-based wagers on the decentralized betting platform Polymarket, walking away with over a million dollars in illicit earnings, according to a newly unsealed federal indictment.
The Italian software engineer, Michele Spagnuolo, a 36-year-old resident of Switzerland, was detained on Wednesday. The Department of Justice has levied serious criminal charges against him, including wire fraud, commodities fraud, and money laundering. Simultaneously, the Commodity Futures Trading Commission initiated a parallel civil action targeting his activities.
The AlphaRaccoon Wagers
The mechanics of the alleged scheme centered on a highly specific set of wagers involving internet search volumes. Throughout 2025, Polymarket users traded heavily on contracts predicting who would emerge as the year’s most searched individual on Google. Operating under the pseudonym AlphaRaccoon, Spagnuolo allegedly examined proprietary, non-public search metrics available within Google’s internal systems before the public final tallies were compiled. Equipped with exact data, he began placing massive wagers against the prevailing market consensus.
Court documents detail a series of highly confident positions that defied public speculation. Spagnuolo risked nearly $1 million betting that Bianca Censori would fail to secure the top spot, and committed an additional $600,000 against Pope Leo XIV achieving the highest search volume. In a more striking maneuver, he backed the musician D4vd—who was facing murder charges at the time—to win the search ranking, executing the trade while the broader trading public viewed the outcome as statistically impossible.
In total, the government outlines twenty-five separate market positions funded by a $2.7 million capital pool. The trades yielded $1.2 million in pure profit. Investigators noted that as soon as the digital assets were transferred from the platform into a private cryptocurrency wallet, the AlphaRaccoon moniker was stripped from the user profile.
The unusual trading volume did not go unnoticed by the online community. In specialized Discord servers where prediction market speculators congregate, users actively tracked the account’s behavior. Message logs reveal traders advising peers to mirror the entity’s movements, noting that the account possessed an undeniable information advantage regarding the final search data before Google ever finalized the public release.
Corporate Responses and Traceable Digital Footprints
Google confirmed it assisted federal law enforcement during the investigation and has placed Spagnuolo on leave. Corporate representative Jaclyn Vazquez clarified that while the worker utilized standard internal marketing tools accessible to the broader workforce, exploiting that proprietary data for financial wagering constituted a severe violation of employment terms. Spagnuolo did not offer a response to inquiries regarding the criminal charges.
The case surfaces during a broader, highly politicized debate over the legal boundaries of prediction markets, which allow users to wager on anything from corporate policy shifts to global military developments. The regulatory landscape remains fractured. While standard equity markets are bound by strict statutory insider trading frameworks, prediction platforms operate in a more ambiguous legal territory. However, federal authorities maintain that exploiting non-public corporate data for financial gain remains fundamentally illegal under existing fraud statutes.
The prosecution marks the second major federal insider trading case tied to the industry within a month. Just weeks ago, a master sergeant within the U.S. Army Special Forces faced criminal charges after allegedly utilizing classified military intelligence surrounding the capture of Venezuelan leader Nicolás Maduro to secure a $400,000 payout on Polymarket.
Polymarket’s chief legal officer, Olivia Chalos, defended the platform’s structural integrity, emphasizing that because the system operates entirely via public blockchain ledgers, illicit actors leave permanent, traceable digital footprints. She observed that the platform is currently the only prediction market whose operational data has successfully underpinned federal insider trading indictments.
A Highly Charged Political Backdrop
The criminal filing arrived at a highly sensitive political moment for the industry. A day prior to the arrest, President Trump publicly advocated on social media for the expansion of the prediction market sector, asserting that federal agencies should hold exclusive jurisdiction over the platforms.
This position clashes directly with individual state regulators. Local officials, including those in Minnesota, which recently enacted a total ban on the platforms, argue these sites are thinly veiled gambling operations that fall under state betting laws. The administration, conversely, views them as complex financial instruments akin to traditional grain or crude oil futures, placing them under the purview of the Commodity Futures Trading Commission.
Polymarket itself has a volatile history with American law enforcement. Structurally based in Panama, the platform barred U.S. users in 2022 as part of a regulatory settlement for operating an unlicensed exchange. In 2024, the FBI executed a search warrant at the residence of its founder, Shayne Coplan, to investigate potential circumventing of that ban. That investigation was ultimately abandoned by the current administration, and Coplan was subsequently invited to a cryptocurrency policy forum at the White House.
The platform also maintains close ties to the administration’s inner circle; Donald Trump Jr. serves as an adviser to both Polymarket and its competitor Kalshi, while his investment firm, 1789 Capital, remains a principal financial backer of the Panamanian platform.
