Michele Spagnuolo, a Google engineer arrested for alleged insider trading on Polymarket, is challenging the charges, arguing his wagers were not regulated financial instruments but rather international gambling outside US jurisdiction. His legal team asserts that the US has no authority over his actions, given that he is a non-US citizen who allegedly placed bets on a non-US platform while living in Zurich, Switzerland.
Spagnuolo, known by the alias "AlphaRaccoon," is accused of commodities fraud, wire fraud, and money laundering. He allegedly profited over $1.2 million by using internal Google information to correctly bet on D4vd being Google's most-searched person of 2025 on Polymarket, which is headquartered in New York but banned in the US and administered by a Panama-based entity. He is currently on leave from Google.
The case highlights a broader legal battle in the US over whether event contracts on prediction markets should be classified as "swaps" under the Commodities Exchange Act or as gambling, which falls under state regulation. Spagnuolo's defense also contends that the internal information he used was not subject to the charges. The Commodity Futures Trading Commission (CFTC), responsible for regulating prediction markets, and Spagnuolo's legal team have not commented on the ongoing case.
This case follows other instances of alleged insider betting. In the UK, investigations are underway into whether individuals placed bets on the timing of elections using inside knowledge, though the amounts involved are reportedly trivial. Separately, research suggests that over 150 Polymarket wallets may have traded on confidential US military information, generating $8 million with a 97.2% win rate, leading to concerns about national security and foreign intelligence exploitation. The Anti-Corruption Data Collective found that these "Orca" trades often attract significant copycat bets from wealthy traders and automated bots, amplifying potentially sensitive signals.
