Federal regulators continued their crackdown on insider trading in prediction markets, this time targeting a Google employee accused of using confidential company data to make roughly $1.2 million trading on Polymarket.
The Commodities Futures Trading Commission announced Tuesday that it filed a civil complaint in the U.S. District Court for the Southern District of New York against Michele Spagnuolo, a Switzerland resident and software engineer at Google, alleging he used sensitive nonpublic information tied to Google's official "Year in Search" rankings for 2025 to profit on prediction-market contracts.
Federal prosecutors simultaneously unsealed criminal charges against Spagnuolo in a parallel action in New York.
According to the complaint, Spagnuolo allegedly traded under the Polymarket username "AlphaRaccoon" and purchased "Yes" and "No" shares tied to at least 23 Google Year in Search-related contracts, including wagers involving the "#1 Searched Person on Google this year" and the "Top 5 Most Searched People on Google 2025."
The CFTC alleged Spagnuolo achieved "near-perfect accuracy" because he had access to confidential internal information through his employment at Google.
"As I have said repeatedly, the Commission will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform that is used," said CFTC Commissioner Michael S. Selig in a statement. "Today's action further underscores our commitment to rooting out insider trading and promoting market integrity in prediction markets."
The agency is seeking restitution, disgorgement of profits, civil monetary penalties, trading bans, registration bans, and a permanent injunction.
Regulators Push Narrative Of Strict Oversight
The case marks the latest insider-trading action involving prediction markets as regulators attempt to show the fast-growing sector faces similar enforcement standards as traditional financial markets.
Earlier this year, the CFTC and federal prosecutors charged U.S. Army soldier Gannon Ken Van Dyke with allegedly using classified information tied to a U.S. operation involving Venezuela to place profitable trades on Polymarket's non-U.S. platform.
The CFTC has also recently highlighted several enforcement investigations tied to political insider trading, including cases involving candidates allegedly trading on their own elections.
The stepped-up enforcement comes as prediction market platforms face increasing political and regulatory scrutiny in Washington.
Several bills introduced in Congress over the past year have sought to place additional restrictions on event contracts involving politics, sports, military conflicts, and assassination or terrorism-related markets.
Insider Trading Concerns Trigger Bipartisan Congressional Outcry
Lawmakers on both sides of the aisle have raised concerns over insider information, market manipulation, integrity risks, and whether certain contracts resemble unregulated gambling products rather than legitimate financial instruments.
Sen. Richard Blumenthal recently sent letters to major U.S. sports leagues warning about "gambling's ugly takeover of sports" and specifically questioned league relationships with sportsbooks and prediction-market operators.
At the same time, states including Wisconsin, Nevada, New York, Minnesota, Illinois, and Massachusetts have either filed lawsuits, issued cease-and-desist orders, or passed legislation targeting sports-event contracts offered by companies such as Kalshi and Polymarket.
Despite those mounting legal challenges, the CFTC under Selig has largely defended federal authority over prediction markets and repeatedly emphasized that properly regulated event contracts can operate lawfully under the Commodity Exchange Act.
Tuesday's action signals that while the agency may support prediction markets as a regulated financial product, it also intends to aggressively police insider trading and integrity violations as the industry rapidly expands.
Our Bill Speros covers all aspects of prediction market apps here at RotoWire.com.
