Google engineer faces charges over $1.2M bets using internal data

The Case Against Michele Spagnuolo

Google’s information security engineer Michele Spagnuolo is facing federal charges for allegedly using confidential internal data to bet on Polymarket, a prediction platform. Court documents unsealed by ABC News and Axios say Michele Spagnuolo, an Italian citizen living in Switzerland, accessed nonpublic Google search trend data to predict the company’s annual “Year in Search rankings”. Prosecutors say he placed bets under the name “AlphaRaccoon” between October and December 2025, earning over $1.2 million from 16 trades.

The Southern District of New York’s U.S. Attorney charged Spagnuolo with commodities fraud, wire fraud, and money laundering. The charges stem from his alleged use of insider information to predict search rankings. His bets included wagering against public figures like Bianca Censori and President Donald Trump, while correctly forecasting singer D4vd as Google’s most-searched individual. The FBI tied his accounts to an Italian ID card, despite his use of cryptocurrency across multiple wallets.

Rise of Prediction Markets and Blockchain Technology

“this 'traceable,' a feature that helped law enforcement track illicit activity.”

Prediction markets, where users bet on future events, have grown alongside data analytics and blockchain. Polymarket, the platform at the center of this case, uses a transparent blockchain to record all transactions. The platform’s spokesperson called this ‘traceable,’ a feature that helped law enforcement track illicit activity.

This case shows a growing trend: corporate data and financial markets increasingly intersect. A 2026 SSRN paper titled ‘From Iran to Taylor Swift: Informed trading in prediction markets’ notes that insider trading on such platforms has risen as companies collect more user data. The study, by UC Berkeley researchers, found 82% of trades involving corporate data showed ‘statistically significant’ profits compared to random guesses.

Legal and Ethical Gray Areas

While Spagnuolo’s actions appear to break insider trading laws, the case raises complex legal questions. U.S. securities law typically requires nonpublic financial or merger information for insider trading. However, Spagnuolo’s alleged use of search trend data—publicly available in aggregate form—has sparked debate over what counts as ‘material nonpublic information’.’

Legal experts reference a 2024 Supreme Court case, SEC v. Chen, which ruled consumer behavior data could qualify as insider information if it provides a competitive advantage. This precedent may shape how courts view cases like Spagnuolo’s. Google’s internal policy, which bans using confidential info for personal gain, has been cited as a key reason the company cooperated with investigators.

Historical Precedent: Corporate Data as a Target

This case isn’t the first time corporate data has been used for financial gain. In 2022, a former Amazon engineer faced charges for using internal data to predict stock movements, leading to tighter data access controls. Similarly, in 2021, a Microsoft employee was fined $500,000 for trading on nonpublic cloud usage reports.

The paper by Nigrini et al. (The patterns of the numbers used in occupational fraud schemes) shows fraud involving corporate data often follows a pattern: perpetrators typically exploit data silos—isolated datasets hard to audit. Spagnuolo’s case fits this pattern, as his access to Google’s search trend data was limited to his role in information security, creating a data silo he allegedly exploited.

Blockchain Paradox and Regulatory Challenges

“We’re standing at the edge of a new frontier where corporate data and financial markets collide. The tools we use to police this space must evolve as fast as the technology does.”

Polymarket’s use of blockchain highlights a paradox in modern finance: while the technology ensures transparency, it also enables anonymity. Spagnuolo’s ability to operate across multiple cryptocurrency wallets without detection shows the challenges regulators face in tracking illicit trades. This case has prompted calls for ‘smart contract audits,’ a new cybersecurity field focused on verifying blockchain-based financial systems.

Industry analysts say the case could speed up regulatory changes. The SEC has already proposed new rules requiring prediction platforms to implement ‘real-time data verification’ mechanisms. As one financial regulator told TechCrunch, We’re standing at the edge of a new frontier where corporate data and financial markets collide. The tools we use to police this space must evolve as fast as the technology does.

Corporate Data Security and Industry Standards

Spagnuolo’s case has sparked a wider conversation about data ethics in tech. Companies like Google, Amazon, and Microsoft now face pressure to tighten internal data access. In response, Google announced plans to expand its ‘data usage audits’, a move that could set a new industry standard.

For investors, the case serves as a warning about prediction markets. While these platforms offer opportunities, they also expose participants to legal risks. As one market analyst noted, ‘The line between informed trading and insider trading is thinner than ever. The Spagnuolo case is a wake-up call for anyone who thinks they can exploit data without consequences.’