This article first appeared on GuruFocus.
A new insider-trading case is putting prediction markets back in the investor spotlight, after a Google software engineer was charged with allegedly making more than $1 million on Polymarket from one of the internet’s most closely watched search outcomes. Michele Spagnuolo, a 36-year-old Italian citizen who joined Alphabet (NASDAQ:GOOG) unit Google in 2014, was charged in a complaint unsealed Wednesday in New York federal court. He appeared before a federal magistrate and was released on a $2.25 million bond, while his lawyer declined to comment on the charges.
Prosecutors allege Spagnuolo had access to company data tracking user searches when he placed bets that singer D4vd would become Google’s most-searched person in 2025. At the time, Polymarket assigned a near-zero probability to D4vd topping figures such as Pope Leo XIV and Kendrick Lamar, according to prosecutors. When D4vd was publicly announced as the top-ranked search in December, Spagnuolo allegedly made around $1.2 million. Google said the employee accessed marketing material through a tool available to all employees, called the alleged use of confidential information for betting a serious policy breach, placed him on leave, and said it is working with law enforcement.
The case could become another pressure point for prediction-market operators as regulators and investors watch how platforms manage insider-trading risk. The CFTC filed a parallel civil lawsuit seeking civil penalties and the return of alleged illicit profits, while prosecutors said Spagnuolo traded under the username AlphaRaccoon and allegedly used a crypto privacy service after online users began questioning the account’s Polymarket activity. Polymarket has said it is strengthening insider-trading detection, including work with Chainalysis, Palantir (NASDAQ:PLTR), and TWG AI, but the case may keep focus on offshore market structures, identity checks, and whether prediction platforms can expand in the U.S. without attracting tougher oversight.
