Prediction markets like Kalshi and Polymarket have an insider-trading problem. And now it seems the U.S. Department of Justice is doing something about this illegal activity.
Last month, the DOJ charged a U.S. Army soldier with profiting from Polymarket trades made using their access to classified information regarding the capture of Nicolás Maduro in Venezuela.
Now, the DOJ has made another insider trading charge. This time against an engineer at Google.
According to the DOJ complaint, Google engineer Michele Spagnuolo made more than $1.2 million off of Polymarket trades based on the search giant's confidential business information.
"Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets,” U.S. Attorney Jay Clayton said in a statement. "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."
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Spagnuolo, who has worked as a software engineer at Google for over a decade, made lucrative Polymarket trades using the alias "AlphaRaccoon," according to the complaint.
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At the end of every year, Google releases the top trending searches across multiple niches and categories, a feature called the "Year in Search." Before being released to the public, this data was marked "Google Confidential" within the company. The DOJ alleges that Spagnuolo made trades based on this unreleased Google data ahead of the company's 2025 Year in Search.
The complaint alleges that between October and December 2025, Spagnuolo made multiple trades on Polymarket regarding who the “Top 5 Most Searched People on Google" would be for the year. Google didn't publicly release the Year in Search until Dec. 4, 2025. (For those curious, the top 5 most searched people on Google in 2025 were d4vd, Kendrick Lamar, Jimmy Kimmel, Tyler Robinson, and Pope Leo XIV.)
Spagnuolo, an Italian citizen living in Switzerland, is alleged to have profited over $1.2 million from these trades.
Spagnuolo is being charged with violating the Commodity Exchange Act, wire fraud, and money laundering. Each count carries anywhere between a maximum of 10 to 20 years in prison.
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