A Google software engineer is facing federal criminal charges after prosecutors accused him of using confidential internal company data to profit from prediction markets on blockchain-based betting platform Polymarket.
According to federal authorities in the Southern District of New York, 36-year-old Michele Spagnuolo allegedly used privileged access to Google’s internal “Year in Search” data months before it became public, allowing him to place highly profitable bets on Polymarket with near certainty rather than speculation.
Spagnuolo was arrested on May 27, 2026, and charged with commodities fraud, wire fraud, and money laundering in what prosecutors are calling one of the most significant insider-style manipulation cases tied to decentralized prediction markets this year.
The case has intensified scrutiny around Polymarket and raised uncomfortable questions about whether blockchain prediction platforms are becoming vulnerable to the same kinds of insider abuse long associated with traditional financial markets.
How Polymarket Works
Polymarket operates as an online prediction marketplace where users wager on real-world outcomes ranging from politics and sports to celebrity trends and economic events.
The platform uses a simple “YES” or “NO” market structure. Each share trades between $0 and $1 depending on how likely traders believe an event is to occur.
For example, if a candidate has a 90% probability of not winning a particular category, the “NO” shares might trade at around 90 cents. If that prediction ultimately proves correct, each share settles at $1, allowing traders to profit from the difference.
Most participants rely on public information, intuition, crowd sentiment, or statistical analysis to make decisions. But according to prosecutors, Spagnuolo allegedly possessed something far more powerful: advance knowledge of the actual results.
The Importance of Google’s “Year in Search”
Google’s annual “Year in Search” campaign has been one of the company’s highest-profile media events for more than two decades.
The campaign highlights the people, events, trends, and topics that generated the most search interest worldwide throughout the year. Every December, millions of users, journalists, advertisers, and marketers closely follow the release.
According to FBI Special Agent Brandon Racz, the campaign serves multiple strategic purposes for Google.
It drives enormous media attention toward the company’s platforms, reinforces Google’s image as a cultural barometer of global public interest, and provides advertisers with a major promotional opportunity tied to trending conversations.
Because of its marketing value, the underlying search data is treated as highly sensitive inside Google.
Federal prosecutors stated in the criminal complaint that access to the final “Year in Search” rankings was restricted to a limited number of employees. If the information leaked prematurely, it could undermine the campaign’s impact, reduce media attention, and damage advertising opportunities.
That secrecy became the foundation of the government’s case.
The Alleged Betting Scheme
Polymarket launched two prediction markets related to Google’s 2025 “Year in Search” campaign in October 2025.
One market asked traders to predict who would become Google’s most searched person globally in 2025. Another asked whether certain individuals would appear in the global Top 5 rankings.
The betting markets included public figures such as Donald Trump, Kendrick Lamar, Pope Leo XIV, and others.
According to prosecutors, Spagnuolo used an anonymous Polymarket account called “AlphaRaccoon” to place a series of highly targeted wagers after accessing Google’s internal search analytics tools.
One of the earliest alleged trades involved a $403 bet on rapper Kendrick Lamar becoming the most searched person of the year. At the time, market odds suggested only a 3% probability.
However, prosecutors claim Google’s internal data already showed Kendrick Lamar leading the rankings.
Spagnuolo also allegedly placed a $10,807 wager that Pope Leo XIV would not become the most searched person globally, despite Polymarket traders assigning the outcome roughly even odds.
Later, on November 27, prosecutors say Spagnuolo checked Google’s internal systems again and discovered that musician d4vd had overtaken Kendrick Lamar in search popularity.
Most traders on Polymarket barely recognized d4vd’s name at the time, causing the market to dramatically underestimate the probability of his appearance in Google’s rankings.
Using the AlphaRaccoon account, Spagnuolo allegedly wagered $381.12 that d4vd would appear in Google’s Top 5, even though market participants assigned only an 18% chance to that possibility.
He also reportedly placed a small but extremely high-upside bet that d4vd would become the overall No. 1 searched individual.
The complaint alleges that the largest wagers included:
- $937,688 betting Bianca Censori would not rank No. 1
- $613,587 betting Pope Leo XIV would not rank No. 1
- $509,149 betting Donald Trump would not rank No. 1
- $171,612 betting Donald Trump would not appear in the Top 5
In total, prosecutors claim AlphaRaccoon risked approximately $2.75 million across roughly 25 different prediction positions.
When Google officially published the results on December 4, the final Top 5 global searches reportedly included d4vd, Kendrick Lamar, Jimmy Kimmel, Tyler Robinson, and Pope Leo XIV.
Those outcomes allegedly generated around $1.2 million in illicit profits.
How the FBI Tracked the Transactions
Federal investigators say Spagnuolo attempted to hide the source of his winnings by converting funds into multiple cryptocurrencies and routing transactions through blockchain obfuscation services designed to make wallet tracing more difficult.
However, investigators claim they successfully tracked the movement of funds across blockchain addresses and connected the transactions back to the AlphaRaccoon account.
The criminal complaint stated:
“Unlike his trading counterparties, Spagnuolo knew the results of these wagers before the public trading market knew because he accessed Google’s confidential internal data.”
The case demonstrates how blockchain transactions, despite their pseudonymous nature, can still leave a permanent forensic trail that law enforcement agencies are increasingly capable of analyzing.
Google’s Response Raises New Questions
Following the arrest, a Google spokesperson confirmed the company was cooperating with law enforcement.
The spokesperson stated that the employee had accessed marketing materials through an internal tool available to employees and described the alleged conduct as a serious violation of company policy.
Google also confirmed that Spagnuolo had been placed on leave pending further action.
However, the company’s public statement appeared to conflict with elements of the federal complaint.
While Google suggested the internal tool was broadly accessible, prosecutors specifically described the “Year in Search” data as restricted to only a limited group of employees due to its confidential nature.
That discrepancy may become an important point as the case develops, particularly regarding internal access controls and corporate security procedures.
A Growing Problem for Prediction Markets
The case marks the second major insider-style controversy linked to Polymarket in 2026 and is fueling debate over whether decentralized prediction markets are adequately protected against informational abuse.
Prediction markets have long been praised as efficient systems for aggregating public information and forecasting outcomes. But critics argue they become fundamentally unfair when participants gain access to privileged data unavailable to the broader market.
The allegations against Spagnuolo resemble classic insider trading schemes seen in traditional finance, except instead of trading stocks based on confidential earnings reports, the bets involved prediction contracts tied to non-public search analytics.
Legal experts say the case could set an important precedent for how U.S. regulators and prosecutors approach insider conduct on blockchain-based prediction platforms.
As prediction markets continue growing in popularity, the line between gambling, financial speculation, and market manipulation is becoming increasingly blurred.
For Polymarket, which has already faced regulatory pressure in previous years, the scandal could intensify calls for stronger compliance systems, enhanced monitoring tools, and stricter safeguards against insider exploitation.
And for the broader crypto industry, the incident serves as another reminder that decentralized platforms may still face very centralized legal consequences when confidential information is used for profit.
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