A Google software engineer built a $1.2 million edge on a crypto prediction platform. His weapon was a red-bannered internal tool marked “Google Confidential.”
Michele Spagnuolo, 36, an Italian citizen based in Switzerland, was arrested Wednesday in New York. U.S. Attorney for the Southern District of New York Jay Clayton and FBI Assistant Director in Charge James C. Barnacle Jr. announced charges of commodities fraud, wire fraud, and money laundering against Spagnuolo, who operated under the Polymarket username “AlphaRaccoon.”
The crypto community already knew the name.
Back on December 4, 2025, just hours after Google’s Year in Search results dropped, users on X and Discord had started connecting the dots. As Polymarket Money posted on X:
“$1.15M profit in 24 hours trading Google search markets. Who is AlphaRaccoon?”
That single post set off a chain of on-chain forensics that crypto users were already conducting. As haeju.eth posted on X:
“A Google insider has officially been exposed on Polymarket. This dude just profited $1,000,000 in a single day betting on the Google search markets. Google accidentally pushed the results early, then removed them, but not before it revealed he went 22/23 on his bets.”
The community read the blockchain. Federal prosecutors read the community. Then they built the case.
When the Bets Were Too Good to Be Noise
From October 15, 2025, through December 4, 2025, the AlphaRaccoon account staked approximately $2,754,092 across roughly 25 Google Year in Search markets on Polymarket, walking away with about $1.2 million in profit.
The bets were not random long shots. They were surgical.
Spagnuolo reportedly wagered close to $937,688 that Bianca Censori would not top the most-searched list, more than $613,587 that Pope Leo XIV would not, and another bet that rapper d4vd would reach number one at a point when Polymarket traders assigned near-zero probability to that outcome. The market did not see d4vd coming. Spagnuolo did because the internal data already showed it.
FBI Special Agent Brandon Racz, in the sealed complaint now unsealed in Manhattan federal court, stated that Spagnuolo accessed Google’s confidential Year in Search data on or about October 15, 2025, at approximately 21:25 UTC. The following day, the AlphaRaccoon account placed a bet on Kendrick Lamar being the number-one searched person at implied odds of roughly 3%, and immediately wagered against Pope Leo XIV at the same time.
A retail Polymarket user betting those same markets with no inside view would have been going on guesswork. Spagnuolo was not guessing.
On November 27, 2025, Spagnuolo accessed the internal tool again. By then, d4vd had replaced Lamar at the top. Within three hours, the AlphaRaccoon account placed bets on d4vd appearing in the top five at implied odds of around 18%. The market had priced d4vd at near-zero. The internal data said otherwise.
The Tool With the Red Banner
The internal Google software tool Spagnuolo used displayed a banner in red text that read, in part, “Google Confidential.” Spagnuolo had certified his understanding of Google’s confidentiality and ethics policies. He signed those agreements. Then he opened Polymarket.
Google’s Year in Search campaign carries real commercial weight. The release drives user traffic to Google platforms, generates advertising demand through media coverage, and signals to brand partners the reach of the search engine. Premature disclosure of that data could gut the media impact Google depends on to monetize the announcement.
That is what Spagnuolo allegedly monetized instead. Not ad revenue. Prediction market winnings.
Google placed Spagnuolo on administrative leave. In a statement, the company said the employee “accessed our marketing material using a tool available to all employees, but using such confidential information to place bets is a serious breach of our policies.”
After the Win, the Cleanup
Winning was not the end of the scheme.
After the Year in Search markets resolved, Spagnuolo’s AlphaRaccoon account received approximately 3.9 million USDC.e. On December 10, 2025, the account transferred about 5.045 million USDC.e back to an external wallet. That transfer emptied the account. Prosecutors allege the funds then passed through at least two cryptocurrency swap services and a privacy-focused transfer tool designed to strip wallet addresses from blockchain records.
It did not work.
FBI cryptocurrency tracing linked Wallet-0xAf6 to an account registered under Spagnuolo’s name. Payment processor records, corroborated by an Italian government identification card, tied the wallet directly to Michele Spagnuolo.
After online reports in December 2025 raised suspicions about AlphaRaccoon’s trades, Spagnuolo changed the account username, reverting it to an alphanumeric wallet address. By then, the blockchain ledger had already recorded everything.
The Second Polymarket Arrest This Year
Spagnuolo is now the second person this year to face criminal charges for alleged insider trading on a prediction market. Last month, prosecutors in the same Southern District of New York charged U.S. Army Special Forces Master Sergeant Gannon Ken Van Dyke with using classified information about the planned capture of Venezuelan President Nicolas Maduro to profit from Polymarket wagers, allegedly netting over $400,000. Van Dyke has pleaded not guilty.
Polymarket issued a statement saying its market integrity infrastructure flagged Spagnuolo before his arrest. “With 2 out of 2 arrests in this industry resulting from our criminal referrals, Polymarket has emerged as the enforcement leader,” the company said.
The Commodity Futures Trading Commission filed a parallel civil complaint against Spagnuolo on May 27, 2026, seeking restitution, disgorgement, civil monetary penalties, trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act.
The criminal charges carry stiff exposure. The commodities fraud count carries a maximum 10-year sentence. Wire fraud and money laundering each carry up to 20 years. Combined, Spagnuolo faces a potential maximum of 50 years in federal prison.
He appeared before U.S. Magistrate Judge Sarah Netburn on Wednesday and was released on a $2.25 million bond. No plea was entered.
