Overview
- Federal prosecutors in the Southern District of New York charged Michele Spagnuolo with commodities fraud, wire fraud and money laundering after an unsealed complaint tied him to insider bets on Polymarket; he was arrested in New York, released on a $2.25 million bond and placed on leave by Google.
- Prosecutors allege Spagnuolo used an internal Google tool that tracked Year in Search trends to place at least 16 to 25 bets under the account name AlphaRaccoon between October and December 2025 and netted roughly $1.2 million when Google published its 2025 results.
- Authorities say Spagnuolo then tried to hide the proceeds by moving cryptocurrency through mixers and swap services and converting funds to a payment processor in Italy, conduct that supports the money‑laundering charge.
- The Commodity Futures Trading Commission filed a parallel civil enforcement action seeking disgorgement, penalties and trading or registration bans, and Polymarket says it flagged the AlphaRaccoon activity and cooperated with investigators.
- The case follows a recent prosecution of a U.S. soldier and shows prosecutors will use traditional commodities and fraud laws on blockchain prediction markets, a development that is pushing platforms to tighten rules and drawing congressional scrutiny of insider risks tied to proprietary corporate data.