The U.S. Attorney’s Office for the Southern District of New York unsealed a criminal complaint on May 27, 2026 accusing Google software engineer Michele Spagnuolo of using confidential search-trend data to make more than $1.2 million on Polymarket. The Commodity Futures Trading Commission filed a parallel civil complaint on May 27, alleging insider trading in event contracts under the Commodity Exchange Act.
The paired actions mattered beyond one account. They showed federal prosecutors and the derivatives regulator treating blockchain-settled prediction-market trades as markets in which misappropriating corporate information could trigger familiar fraud and insider-trading theories. The complaints were allegations, not findings of liability or guilt, and Spagnuolo was entitled to the presumption of innocence.
What the government alleged
According to the Justice Department, Spagnuolo had access through his Google role to an internal software tool containing confidential, nonpublic data. The tool displayed a “Google Confidential” banner, and the complaint said he had certified his understanding of company confidentiality and ethics policies.
Prosecutors alleged that an account known as “AlphaRaccoon” traded Polymarket contracts tied to Google’s 2025 Year in Search results after Spagnuolo accessed internal information. From October 15 through December 4, 2025, the account allegedly risked approximately $2,754,092 across approximately 25 Year in Search outcomes. After Google publicly released the results and the markets resolved on December 4, prosecutors calculated approximately $1.2 million in profit.
Those figures are complaint allegations, not an independently audited account statement. The CFTC described purchases on at least 23 contracts, while the Justice Department described approximately 25 outcomes. The categories are not necessarily identical, and this reconstruction does not force them into one count.
The criminal complaint charged one count each of commodities fraud, wire fraud and money laundering. The Justice Department said the Commodity Exchange Act count carried a statutory maximum of 10 years and the other two counts each carried a maximum of 20 years; any sentence would depend on a conviction and judicial determination. The CFTC separately sought restitution, disgorgement, civil monetary penalties, trading and registration bans, and an injunction.
Why crypto rails were central
Polymarket’s contracts paid according to binary outcomes, but the alleged trading and proceeds moved through cryptocurrency. The criminal complaint described shares priced in USDC.e, a dollar-pegged stablecoin, between $0 and $1. It also said FBI personnel used blockchain tracing alongside records from Google and Polymarket to connect the account, wallets and transfers.
That did not mean a blockchain proved the insider-trading allegation by itself. Public transaction records can show transfers between addresses, but attribution, access to nonpublic information, duties of confidentiality and intent depend on additional evidence. The government’s theory combined on-chain activity with employer records, platform records, interviews and alleged timing.
The case also exposed a market-integrity problem specific to event contracts. A trader may know the result of a corporate ranking, product announcement or data release before the public while counterparties price the contract as uncertain. On May 27, the CFTC’s position was that changing the instrument and settlement technology did not remove its anti-fraud authority.
What remained unresolved on May 27
Neither complaint established that every prediction-market contract was a swap or settled the broader jurisdictional disputes surrounding prediction markets. The CFTC alleged that the Year in Search contracts at issue were swaps and that Spagnuolo violated Section 6(c)(1) of the Commodity Exchange Act and Rule 180.1. Those legal propositions still had to be tested in court.
The event-day record therefore supported a narrower conclusion: federal authorities had opened parallel criminal and civil cases over alleged use of confidential corporate data on a crypto-based prediction market. It did not establish guilt, final penalties, a marketwide compliance standard or the outcome of either proceeding.
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