Google Employee Arrested for Allegedly Exploiting Internal Search Data in $1.2M Polymarket Scheme

TLDR

• Michele Spagnuolo, a software engineer at Google, has been federally indicted for allegedly exploiting confidential company information for Polymarket wagers
• Prosecutors claim he operated as “AlphaRaccoon,” wagering $2.7 million and earning $1.2 million in profits
• The engineer allegedly leveraged a Google internal tool to monitor search trends before placing corresponding bets
• Federal charges include commodities fraud, wire fraud, and money laundering, carrying potential prison time of up to 50 years
• A parallel civil case from the CFTC demands financial restitution, penalties, and lifetime market prohibitions

Federal authorities allege that Michele Spagnuolo leveraged privileged access to Google’s search analytics to gain an unfair advantage on cryptocurrency prediction markets.

On May 28, the Department of Justice revealed criminal charges against Spagnuolo, a Google software engineer working within the Southern District of New York. According to prosecutors, he exploited confidential internal information to execute 25 separate wagers on Polymarket, a blockchain-based prediction marketplace.

The indictment alleges Spagnuolo utilized a proprietary Google analytics tool to identify which individuals were generating the highest search volume throughout 2025. He then allegedly placed strategic bets predicting these same people would appear on Google’s annual “most searched” rankings.

According to federal prosecutors, he conducted these activities through the Polymarket handle “AlphaRaccoon.” This account reportedly channeled approximately $3.8 million in USDC stablecoin to the platform and generated roughly $1.2 million in net gains.

Details of the Alleged Operation

The criminal complaint highlights a specific instance involving rapper D4vd, who faced recent murder charges. Spagnuolo allegedly reviewed Google’s proprietary trending analytics showing D4vd’s surge in search activity, then quickly placed a wager via AlphaRaccoon predicting his appearance among the year’s top searches—all within a matter of hours.

“Unlike the counterparties to his trades, Spagnuolo knew the outcome of these wagers before the trading public did,” the complaint stated.

Following successful wagers, Spagnuolo allegedly transferred 5 million USDC from his Polymarket wallet to external cryptocurrency addresses. These funds were subsequently processed through cryptocurrency exchange platforms and privacy-enhancing tools intended to mask transaction origins on the blockchain.

Investigators trace portions of these funds to an Italian payment processing service, connected to an account registered with Spagnuolo’s official identification documents.

Cover-Up Efforts Following Suspicion

Discussions emerged on Discord and X platforms in December, with community members theorizing that AlphaRaccoon had insider connections to Google. Soon thereafter, the account’s username was reportedly switched to a standard wallet address.

The Department of Justice has charged Spagnuolo with commodities fraud, wire fraud, and money laundering. If convicted on all counts, he could receive up to 50 years of imprisonment.

The Commodity Futures Trading Commission simultaneously launched civil proceedings, pursuing financial restitution, profit disgorgement, monetary sanctions, and lifetime prohibitions from market participation and registration.

CFTC enforcement director David Miller said the division is “a cop on the beat in policing the illegal use of inside information in prediction markets.”

Google has confirmed placing Spagnuolo on administrative leave. A company representative characterized exploiting confidential information for gambling purposes as “a serious breach of our policies,” while noting that the analytics tool in question was accessible across the employee base.

This marks the second significant insider trading prosecution involving Polymarket. Earlier in April, federal authorities arrested a U.S. Army servicemember accused of wagering on classified military intelligence regarding Venezuelan leader Nicolás Maduro’s potential capture.

Last Friday, Congressional lawmakers initiated an investigation into both Polymarket and competing platform Kalshi, expressing alarm that government personnel might be leveraging privileged information for financial gain through prediction markets.