Securities Regulation Daily Wrap Up, ENFORCEMENT—S.D.N.Y.: CFTC, DOJ charge Google employee with insider trading on Polymarket, (May 28, 2026)
Organizations Mentioned:U.S. Army
The CFTC and DOJ actions are the second to allege criminal insider trading on prediction markets following April charges involving trading on a U.S. military operation.
The CFTC and Department of Justice filed charges against a Google software engineer over alleged profitable company-related trades on the Polymarket trading platform. The complaints allege that Michele Spagnuolo used confidential information obtained from his Google employment to profit approximately $1.2 million, then took steps to conceal his unlawful use of nonpublic information (CFTC v. Spagnuolo, No. 1:26-cv-04419 (S.D.N.Y. May 27, 2026)); (U.S. v. Spagnuolo, No. 26 MAG 2020 (S.D.N.Y. unsealed May 27, 2026)).
If convicted of the criminal charges, Spagnuolo faces up to 50 years in prison.
Jay Clayton, U.S. Attorney for the Southern District of New York, stressed that prediction markets trades fall within a longstanding legal framework for insider trading.
“Today’s charges reinforce a decades-old message: corporate insiders cannot use confidential business information to turn a profit in our markets,” said Clayton. “Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted.”
CFTC Chairman Michael Selig similarly emphasized that insider trading does not depend on a particular infrastructure.
“As I have said repeatedly, the Commission will not tolerate fraud, manipulation, or insider trading, regardless of the technology or platform that is used,” said CFTC Chairman Michael S. Selig.
Alleged insider trading. Spagnuolo, an Italian citizen residing in Switzerland, was employed as a software engineer at Google, according to the complaints. Spagnuolo allegedly obtained confidential information from an internal Google software tool about which individuals would be the subject of the most Google searches in a given year. The tool allegedly bore a red banner that read “Google Confidential.” Spagnuolo allegedly certified his understanding of Google confidentiality and ethics policies.
According to the CFTC and DOJ, Spagnuolo used this nonpublic information to trade Polymarket event contracts regarding the Google 2025 “Year in Search” list. Under the handle “AlphaRaccoon,” Spagnuolo allegedly risked approximately $2.7 million with near-perfect accuracy over four months, netting profits of approximately $1.2 million when Google revealed the Year in Search results on December 4, 2025.
Online news reports raised suspicion about the massively profitable trades by “AlphaRaccoon.” Spagnuolo allegedly changed his Polymarket handle and cashed out the profits using crypto mixing services.
Duty of confidentiality. The CFTC and DOJ assert that Spagnuolo had a duty of confidentiality to Google. As alleged, Google invests substantial financial and personnel resources in “Year in Search” and the marketing campaign serves multiple commercially significant functions. Because the financial impact of the campaign depends on a coordinated public reveal, premature disclosure could deprive Google of various benefits. As such, Google maintains strict confidentiality over the data and restricts access to a limited number of employees.
“Employees who are entrusted with confidential business information cannot misappropriate that information for personal financial gain,” said CFTC Director of Enforcement David I. Miller. “As this and other enforcement actions show, the Division is a cop on the beat in policing the illegal use of inside information in the prediction markets and other markets within the CFTC’s jurisdiction.”
Charges. The CFTC charged Spagnuolo with violating Section 6(c)(1) of the Commodity Exchange Act (7 U.S.C. § 9(1))) and Regulation 180.1(a)(1), (3) (17 C.F.R. § 180.1(a)(1), (3)). The CFTC seeks injunctive relief, trading and registration bans, disgorgement, restitution, and a civil monetary penalty.
The DOJ charged Spagnuolo with one count of violating the Commodity Exchange Act, which carries a maximum sentence of 10 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of money laundering, which carries a maximum sentence of 20 years in prison.
Previous CFTC/DOJ actions. This is the second set of actions involving alleged insider trading on prediction markets. In April, the CFTC and DOJ charged Gannon Ken Van Dyke, a U.S. Army soldier, with using classified information to trade on Polymarket regarding a U.S. military operation to capture former Venezuelan President Nicolás Maduro. Van Dyke pleaded not guilty on April 28.
The cases are No. 1:26-cv-04419 (CFTC) and No. 26 MAG 2020 (U.S.).
Attorneys: Alyson Anne Cohen for the CFTC. Thomas Burnett for the U.S.
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