Google Engineer Accused of Polymarket Insider Trading Says He Was Just Gambling (wired.com) 10
An anonymous reader quotes a report from Wired: Michele Spagnuolo, the Google engineer arrested in May by U.S. authorities for alleged insider trading on Polymarket, is making a new bold bet. On Wednesday, his legal team filed a motion to dismiss the charges against him. Spagnuolo isn't outright denying that he made money using internal information from Google. Instead, his legal team says that the wagers were not financial instruments subject to regulation by the United States' Commodities Exchange Act but rather good old-fashioned international betting that the U.S. has no authority over.
Spagnuolo, who has been placed on leave from Google, is accused of committing commodities fraud, wire fraud, and money laundering. Using the alias "AlphaRaccoon," he allegedly made a series of wagers on Polymarket's flagship platform that resulted in profits totaling over $1.2 million. According to the criminal complaint, "AlphaRaccoon" correctly wagered that the singer D4vd, who gained notoriety for his suspected connection to a grisly killing, would be Google's most-searched person of the year in 2025. (D4vd was later charged with murder; he pleaded not guilty.) [...] Spagnuolo's lawyers argue that defining swaps to include wagers like who the most-searched person on Google will be each year "would fly in the face of the statute's purpose and history" and lead to "absurd results." They say it would make it so that any wager in the world, from a charity raffle to a local Ping-Pong match, could be classified as a financial instrument. "Spagnuolo is basically making the same argument as the states that are suing prediction markets," says a financial services regulation expert Todd Phillips. "This is the issue that will likely go up to the Supreme Court." Featured Video
In addition to disputing the idea that prediction markets offer swaps, Spagnuolo's legal team argues that the U.S. government had no jurisdiction over him in the first place because he's a non-U.S. citizen who was wagering on a non-U.S. platform. Although Polymarket is headquartered in New York, the company's flagship prediction market is banned in the United States and technically is administered by an ostensibly Panama-based entity known as Adventure One QSS. Spagnuolo was living in Zurich, Switzerland, when he allegedly made the Google-related trades on Polymarket. "The extraterritorial argument is interesting and raises the question of whether the U.S. should be the world's prediction markets cop," Philipps says. Spagnuolo's team also claims that the charges should be dismissed because the internal information he supposedly leveraged did not have any commercial value to Google.
Spagnuolo, who has been placed on leave from Google, is accused of committing commodities fraud, wire fraud, and money laundering. Using the alias "AlphaRaccoon," he allegedly made a series of wagers on Polymarket's flagship platform that resulted in profits totaling over $1.2 million. According to the criminal complaint, "AlphaRaccoon" correctly wagered that the singer D4vd, who gained notoriety for his suspected connection to a grisly killing, would be Google's most-searched person of the year in 2025. (D4vd was later charged with murder; he pleaded not guilty.) [...] Spagnuolo's lawyers argue that defining swaps to include wagers like who the most-searched person on Google will be each year "would fly in the face of the statute's purpose and history" and lead to "absurd results." They say it would make it so that any wager in the world, from a charity raffle to a local Ping-Pong match, could be classified as a financial instrument. "Spagnuolo is basically making the same argument as the states that are suing prediction markets," says a financial services regulation expert Todd Phillips. "This is the issue that will likely go up to the Supreme Court." Featured Video
In addition to disputing the idea that prediction markets offer swaps, Spagnuolo's legal team argues that the U.S. government had no jurisdiction over him in the first place because he's a non-U.S. citizen who was wagering on a non-U.S. platform. Although Polymarket is headquartered in New York, the company's flagship prediction market is banned in the United States and technically is administered by an ostensibly Panama-based entity known as Adventure One QSS. Spagnuolo was living in Zurich, Switzerland, when he allegedly made the Google-related trades on Polymarket. "The extraterritorial argument is interesting and raises the question of whether the U.S. should be the world's prediction markets cop," Philipps says. Spagnuolo's team also claims that the charges should be dismissed because the internal information he supposedly leveraged did not have any commercial value to Google.
good luck with that (Score:2)
Re: (Score:2)
Especially as his claim is totally bogus. And no, he is not making a logical argument. He is making a legal argument. Those are different. He also seem to overlook that if this is "international gambling", he becomes subject to other insider trading laws...
Last time I checked (Score:2)
It's not gambling if you rig the game and eliminate chance.
Re: (Score:2)
Also you would think that nobody that uses prediction markets would want people to bet on something with an insider trade.
Re: (Score:2)
For that matter, is the stock market as a whole gambling? And I don't mean that in the typical whiny "waaah, I suck at picking stocks, this is gambling" we often hear; rather, the winners are simply making better use of the available information than the losers.
Relating that back to Spagnuolo - Did he place the bet after all the numbers were compiled and not yet released, or did he make what
redefining insider trading (Score:2)
Traditional insider trading: The CFO reads a quarterly balance sheet before the earnings call and dumps his options.
Web3 insider trading: An engineer looks at the top -b process table of humanity's morbid doomscrolling, sees a homicide spike, and places a decentralized wager from an apartment in Switzerland. We have truly achieved the cyber-dystopian future William Gibson warned us about, only it's profoundly stupider than anticipated.
Re: (Score:2)
only it's profoundly stupider than anticipated.
Indeed, it is. The one thing I have been learning about the human race in the last 10-20 years is that it is really a lot more excessively stupid that you would think.
"Just gambling" is not a valid excuse (Score:2)
As soon as he had insider information, it becomes criminal. Somehow this person does not strike me as very smart.
Re: (Score:2)
> As soon as he had insider information, it becomes criminal. Somehow this person does not strike me as very smart.
Are you a lawyer with expertise in laws about training and gambling? It might be criminal. It might not be. It probably depends on the exact wording of the laws.
Somehow, a person who makes such pronouncements without the relevant expertise and knowledge is not so smart.
Re: "Just gambling" is not a valid excuse (Score:1)
So if I saw a horse walking funny behind the stables and bet against it in a horse race, is that illegal?
Don't bet on things that can speak or understand language. But it's still gambling and absurd to make subject to financial trading regulation.
Facts Only
* Michele Spagnuolo was arrested in May by U.S. authorities for alleged insider trading on Polymarket.
* He allegedly made wagers using the alias "AlphaRaccoon" on Polymarket's platform.
* The alleged profits from these wagers totaled over $1.2 million.
* One wager involved predicting who would be Google's most-searched person in 2025, identified as the singer D4vd.
* Spagnuolo’s legal team argued that prediction market wagers are not financial instruments subject to the Commodities Exchange Act.
* The defense asserted that U.S. jurisdiction was inapplicable because Spagnuolo is a non-U.S. citizen wagering on a non-U.S. platform administered by Adventure One QSS.
* Spagnuolo was residing in Zurich, Switzerland, when the trades were allegedly made.
Executive Summary
Full Take
The dispute centers on the boundary between unregulated international prediction markets and regulated financial instruments. The argument raised—that attempting to classify all wagers as financial instruments would lead to "absurd results" akin to lawsuits against other prediction markets—highlights a tension between regulatory scope and technological reality in decentralized markets. The concept of extraterritorial jurisdiction introduces a complex geopolitical dimension, forcing a question about which sovereign entity has authority over activities conducted across international boundaries by non-citizens on offshore platforms. Furthermore, the dynamic shifts the focus from mere criminality to the very definition of financial activity itself: whether an outcome prediction, even when using internal information, constitutes a regulated swap or something else entirely. The narrative suggests that as information asymmetry shifts to novel digital spaces, legal frameworks struggle to keep pace, creating a vacuum where traditional concepts like insider trading are tested against new forms of informational advantage.
What happens to the principle of regulatory oversight when the instruments of exchange exist outside the direct reach of national treasuries? How should the concept of "insider information" be applied across global digital assets that lack centralized jurisdictional control? Does focusing solely on the mechanism of information gain obscure the broader implications for how we define and police informational advantage in a borderless economy?
Sentinel — Human
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