Insider trading via prediction markets is back in the spotlight after a Google employee, named in a Commodity Futures Trading Commission (CFTC lawsuit as Michele Spagnulo, was accused of placing multiple trades on what people were searching for online.
The allegation is Spagnuolo, a software engineer who used the alias AlphaRacoon. was guaranteed to win on every trade they placed due to insight on internal search data. The accused is said to have made more than $1.2 million in trading on Polymarket.
Spagnuolo “violated the duties” of his employ, says United States Attorney
Spagnuolo, an Italian citizen who resides in Switzerland, was brought before the U.S. Magistrate Judge Sarah Netburn in the Southern District of New York on Wednesday.
Announcing the case in a statement, the CFTC explained the agency was charging the plaintiff with “commodities fraud, wire fraud, and money laundering arising from his scheme to misappropriate confidential information from his employer and use that information to place a series of profitable Google-related trades on a prediction market platform.”
U.S. Attorney Jay Clayton said: “Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets. As alleged, Spagnuolo violated the duties he owed to his employer and used Google’s confidential business information to make more than $1.2 million in trading profits on Polymarket. Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted.”
FBI Assistant Director in Charge James C. Barnacle, Jr added: “Michele Spagnuolo allegedly abused his elevated access to confidential trends to place bets with nonpublic information and receive more than one million dollars in unlawful profits. The FBI remains dedicated to searching for fraudsters who betray their employer for personal financial gains.”
The charge of one count of violating the Commodity Exchange Act carries a maximum sentence of 10 years in prison, one count of wire fraud carries a maximum sentence of 20 years in prison, and one count of money laundering carries a maximum sentence of 20 years in prison.
Google case latest in string of insider trading instances
Lawmakers continue to voice concerns over the number of insider trading cases emanating from the prediction market sector. Last week, House Oversight Committee Chair James Comer said Friday revealed he is investigating insider trading safeguards at prediction market platforms Kalshi and Polymarket.
Comer sent letters seeking details on identity verification, geographic restrictions and suspicious-trading detection, according to CNBC. He said the probe will examine whether traders used nonpublic information tied to elections and U.S. military actions in Venezuela and Iran, and could support legislation banning Congress members, administration officials and government employees from trading on prediction markets.
One of the most scrutinized cases involved unusually accurate bets on whether the U.S. would enter conflict with Iran, including trades placed shortly before key military developments and ceasefire announcements.
Another investigation centered on wagers tied to Venezuelan President Nicolás Maduro, after authorities arrested a U.S. Special Forces soldier accused of using privileged information related to a possible operation against Maduro. The case intensified congressional scrutiny over whether military personnel or government officials could profit from sensitive geopolitical intelligence through prediction markets.
Prediction-market operators have also pursued insider-trading cases tied to entertainment. Kalshi fined and suspended a MrBeast employee, Artem Kaptur, after alleging he used nonpublic information about YouTube streaming metrics to place highly successful trades linked to MrBeast content.
Prediction markets get presidential backing
President Donald Trump on Tuesday backed the prediction market industry, defending the CFTC’s authority over platforms such as Kalshi and Polymarket. In a social media post, Trump criticized state officials pursuing legal action against the companies and said prediction markets should be allowed to “thrive.”
Trump praised CFTC Chairman Mike Selig and argued states should not interfere with what the agency considers its exclusive federal jurisdiction. He singled out former New Jersey Gov. Chris Christie, New York Attorney General Letitia James, Minnesota Gov. Tim Walz and Illinois Gov. JB Pritzker for supporting tighter state oversight of the industry.
Walz recently signed a law banning many event-based contracts, while James has pursued lawsuits alleging some platforms offer unlicensed gambling products. Christie has argued sports-event contracts threaten regulated sports betting markets.
Pritzker responded Tuesday by defending Illinois restrictions on insider trading tied to prediction markets and accusing Trump of protecting an industry linked to his political allies. Trump’s son, Donald Trump Jr., serves as an adviser to both Kalshi and Polymarket, which have become central players in the rapidly growing prediction-market sector.
