The U.S. Justice Department charged a Google software engineer with commodities fraud, wire fraud, and money laundering on Wednesday amid mounting federal scrutiny over the integrity of online prediction markets. Michele Spagnuolo, a 36-year-old Italian citizen residing in Switzerland, appeared before a U.S. magistrate judge in New York following allegations he used confidential corporate data to illegally secure $1.2 million in winnings on Polymarket.
Operating under the pseudonym “AlphaRacoon,” Spagnuolo allegedly accessed internal Google metrics to guarantee outcomes on specific wagers before the information became public. Court documents indicate he placed approximately $2.7 million in bets late last year focused entirely on the rankings of public figures, including singer D4vd and Pope Leo XIV, in Google’s 2025 “Year in Search” report.
The AlphaRacoon account drew intense public scrutiny in December 2025 after observers noticed a highly suspicious betting pattern. The trader secured 22 wins out of 23 highly specific wagers, prompting social media users to openly theorize that a Google insider was exploiting a temporary data leak, according to an unsealed criminal complaint detailed by The Washington Post.
Polymarket recently claimed it instituted “Enhanced Market Integrity Rules” combining AI-powered surveillance and blockchain forensics to identify illicit activity and report insider trading to authorities. Spagnuolo secured his winnings by illegally accessing the search data before its official December release.
The White House Crackdown on Prediction Market Exploitation
This indictment marks the second high-profile instance of the Justice Department prosecuting a prediction market user for insider trading within a matter of weeks. In April 2026, authorities charged Gannon Ken Van Dyke, a U.S. Special Forces soldier, after he allegedly used classified military intelligence regarding the capture of Venezuelan President Nicolás Maduro to win approximately $400,000 on the platform.
The rise in platform exploitation recently led the White House to issue a formal memo in March 2026 explicitly warning federal staffers and corporate contractors. The directive stated that using nonpublic or classified information to bet on prediction platforms constitutes a criminal offense, shifting federal policy to treat online betting markets with the same regulatory severity as traditional Wall Street stock exchanges.