The US justice department has charged a Google software engineer with using insider information to rig bets tied to Google’s most-searched list on the prediction market Polymarket, earning $1.2m in profits, according to a complaint unsealed on Wednesday.

Michele Spagnuolo, a 36-year-old Italian citizen, allegedly used insider information to bet on long-shot candidates and reap immense financial gain. His arrest comes one month after prosecutors charged a US army soldier with using classified information to place Polymarket bets about military action in Venezuela.

The charges against Spagnuolo are part of a broader boom in the use and misuse of prediction markets, which have grown into a multibillion-dollar industry in recent years. Concerns over insider trading have led to federal agencies taking a closer look at how to regulate markets and prosecute potential use of classified information for betting purposes.

Although numerous states have considered bans or increased regulation of prediction markets, there is no cohesive federal framework for regulating the betting platforms. In a social media post on Tuesday, Donald Trump opposed state legislation targeting the markets and called proponents such as the Illinois governor, JB Pritzker, “scum”.

“It’s a major industry and we must protect it,” Trump posted.

In Spagnuolo’s case, he allegedly placed niche bets on subjects such as indie musician D4vd, who authorities charged last year with the murder of a teenage girl, appearing on Google’s most-searched list. Spagnuolo used insider information to correctly place a bet that D4vd would top Google’s list, according to the complaint. Markets placed a “near zero probability” on D4vd topping the list, according to the complaint, making Spagnuolo’s bet especially profitable.

Spagnuolo, on an account called “AlphaRaccoon”, also used insider information when placing other bets based on Google’s most-searched list, according to the complaint. He made a bet in October that rapper Kendrick Lamar would top the list, at a time when Google’s internal data showed that Lamar was on track to be the most-searched person of the year.

Reuters could not immediately identify an attorney for Spagnuolo.

Spagnuolo lives in Switzerland, according to the complaint filed in the federal court in Manhattan.

Jay Clayton, the US attorney for the southern district of New York, said in a statement that prosecutors will pursue corporate insiders who seek to use confidential business information to turn a profit in prediction markets.

“Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted,” Clayton said.

Google said in a statement that it was working with law enforcement and that using confidential information to place bets was a serious breach of company policy. Spagnuolo has been placed on leave, according to a Google spokesperson.

Polymarket said it helped law enforcement investigate Spagnuolo’s activity, and it was the only prediction platform to date whose cooperation had led to insider trading charges in the United States.