Prediction Market “Insider Trading” Revisited: Technology Employee Charged With Using Confidential Corporate Information to Profit from Event Contracts

A Google engineer allegedly bet on which celebrities would top Google’s “Year in Search” rankings, using Google’s own confidential data to do it.

On May 27, 2026, the U.S. Attorney’s Office for the Southern District of New York (“SDNY”) unsealed criminal charges against Michele Spagnuolo, a Google software engineer based in Switzerland, for allegedly using Google’s confidential internal search data to place winning bets on the prediction marketplace Polymarket, netting approximately $1.2 million in illicit profits.[1] The U.S. Commodity Futures Trading Commission (“CFTC”) filed a parallel civil complaint the same day.[2] The criminal complaint charges Spagnuolo with commodities fraud, wire fraud, and money laundering, while the CFTC’s complaint alleges commodities fraud.[3]

The Alleged Scheme

According to the complaints, Spagnuolo, a Google employee, created a Polymarket account under the pseudonym “AlphaRaccoon” in May 2024.[4] In or around October 2025, Polymarket began allowing users to place bets on Google’s forthcoming “Year in Search” results, which are curated data Google releases publicly each year reflecting the top trending searches from that year.[5]

Between October 15 and December 4, 2025, Spagnuolo allegedly accessed Google’s confidential “Year in Search” data using an internal Google software tool on at least two occasions and then placed trades based on that data shortly after. The government alleges he initially wagered that Kendrick Lamar would be the most-searched person of the year and later shifted his position to d4vd after Google’s internal data changed.[6]

In total, Spagnuolo allegedly spent approximately $2.75 million across roughly 25 contracts and achieved near-perfect trading results, according to the complaints, resulting in profits of approximately $1.2 million.[7] After online observers began speculating that Spagnuolo was a Google insider, Spagnuolo allegedly removed the username from the account.[8]

Legal Framework and Issues to Watch

The Spagnuolo case bears substantial factual similarity to United States v. Chastain, in which a former OpenSea executive was convicted of wire fraud for using OpenSea’s confidential business information about which NFT collections would be featured on OpenSea’s homepage to trade ahead of their promotion.[9]

On July 31, 2025, however, the Second Circuit vacated that conviction on the basis that the District Court did not adequately instruct the jury the meaning of “confidential business information.” The court concluded that confidential business information qualifies as “property” under the wire fraud statute only when it has independent economic value to the business—similar to a trade secret—and its misappropriation results in commercial harm. Applying that standard, the court concluded that the government had not presented sufficient evidence because information about OpenSea’s featured NFT collections was not central to the company’s business model.

The Spagnuolo complaints—in particular the criminal complaint—appear framed to comply with the Chastain standard and avoid appellate risk.[10]

First, the complaint devotes substantial attention to the commercial value of Google’s “Year in Search” data, describing the information as central to Google’s advertising business and alleging, for example, that:

• Google devotes significant resources each year to its “Year in Search” campaign;
• The campaign’s value depends in part on the results remaining confidential until publication;
• The coordinated announcement of the “Year in Search” campaign drives user engagement, generates advertising revenue, and strengthens Google’s relationships with advertisers and content partners;
• To protect that value, Google treats the results as highly confidential; and
• Premature disclosure of “Year in Search” results can result in lost user engagement, reduced advertising revenue, and the loss of a competitive advantage associated with a coordinated release.

At trial, the government would likely seek to prove all of these facts about Google’s business strategy through Google witnesses and internal company documents.

Second, the government charged commodities fraud under 7 U.S.C. §§ 9(1) and 13(a)(5) and 17 C.F.R. § 180.1 in addition to wire fraud. Unlike the wire fraud theory, commodities fraud does not require proof that the misappropriated information constitutes “property.” The CFTC alleges that the Polymarket contracts at issue are swaps under Section 1a(47) of the Commodity Exchange Act and therefore fall within the CFTC’s jurisdiction.[11]

That theory may present additional questions. The contention that Polymarket’s event contracts are “swaps” under the Commodity Exchange Act, and thus within the CFTC’s jurisdiction, may be harder to sustain here than in Van Dyke, discussed in a prior post.[12] There, the government could point to concrete downstream financial consequences of Nicolás Maduro’s potential removal from office, including possible effects on global oil prices. By contrast, the consequences of Google’s “Year in Search” results appear to primarily affect Google’s own revenue rather than broader financial or commodity markets.

In addition, because Spagnuolo is an Italian citizen residing in Switzerland who allegedly traded on a platform with offshore elements, the extraterritorial reach of the Commodity Exchange Act may also become a contested issue.

Key Takeaways for Companies

• Enforcement continues. Prediction markets will be a sustained enforcement focus for DOJ, CFTC, and others. Companies should expect continued scrutiny of trading activity involving confidential corporate information, even outside traditional securities markets.
• Investigations in this area involve prolonged corporate cooperation. Investigations involving the misuse of confidential corporate information frequently require substantial cooperation from the employer. The complaint reflects substantial information obtained from Google documents and personnel. Companies facing allegations of employees placing bets using confidential information should anticipate grand jury subpoenas, CFTC civil investigative demands, requests for documents or witness interviews, and requests or subpoenas for trial testimony. Early engagement with counsel may help manage these demands and preserve privilege where appropriate.
• The need to evaluate value of confidential business information exposes companies to scrutiny. Because the government’s wire fraud theory requires proof of the commercial value of the allegedly misappropriated information, these investigations can become extensive. The government’s inquiry may extend beyond the employee’s specific conduct to the company’s business strategy, including, for example, revenue model, advertiser relationships, and the competitive harm from premature disclosure. Companies should also consider promptly assessing internally whether other employees with access to similar data engaged in comparable conduct.
• Insider trading policies should be assessed. Finally, the Spagnuolo case is a timely reminder to review and refresh policies regarding the use of confidential information for personal benefit. Many such policies focus on publicly traded securities and do not expressly address prediction markets or other non-traditional trading venues. The government’s enforcement posture makes clear that the prohibition on trading on confidential commercial information extends well beyond securities markets, and employee training should reflect that.

This space continues to evolve rapidly, and criminal and civil insider trading enforcement is likely to proceed alongside regulatory and market developments. Just this week, for example, a leading prediction market platform announced that it will begin requiring certain users to verify their employer before trading in markets viewed as higher-risk for insider trading or manipulation. Developments of this kind reinforce the value of adopting refreshed policies governing the use of confidential business information for personal benefit.

[1] Press Release, U.S. Attorney’s Office, Southern District of New York, Google Employee Charged With Insider Trading (May 27, 2026), https://www.justice.gov/usao-sdny/pr/google-employee-charged-insider-trading.

[2] Press Release, U.S. Commodity Futures Trading Commission, CFTC Charges Google Employee with Insider Trading in Search Result-Related Event Contracts (May 27, 2026), https://www.cftc.gov/PressRoom/PressReleases/9237-26; Complaint, Commodity Futures Trading Commission v. Michele Spagnuolo, No. 1:26-cv-04419 (S.D.N.Y. May 27, 2026).

[3] Criminal Complaint, United States v. Michele Spagnuolo, No. 26 MAG 2020 (S.D.N.Y. May 27, 2026).

[4] CFTC Complaint ¶¶ 9, 38.

[5] Criminal Complaint ¶¶ 5(a), 6(b); CFTC Complaint ¶ 28.

[6] Criminal Complaint ¶¶ 8(a)–(c).

[7] Criminal Complaint ¶ 8(d); CFTC Complaint ¶ 42.

[8] Criminal Complaint ¶¶ 9(c); CFTC Complaint ¶ 48.

[9] United States v. Chastain, No. 23-7038, 2025 WL 2165839, at *4–5 (2d Cir. July 31, 2025).

[10] Criminal Complaint ¶¶ 5(a)–(b).

[11] CFTC Complaint ¶¶ 26–27, 29, 50.

[12] Matthew Podolsky et al., The First Prediction Market Insider Trading Case: SDNY and CFTC Test the Limits of Fraud and Commodities Law, Sidley Austin LLP (May 2026), https://www.sidley.com/en/insights/newsupdates/2026/05/the-first-prediction-market-insider-trading-case.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.