Google Engineer Accused of Polymarket Insider Trading Says He Was Just Gambling

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Michele Spagnuolo, the Google engineer arrested in May by US 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 US 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.)

You might not expect the lawyers defending someone accused of felonies to agree with state prosecutors, but the vicious legal infighting over prediction markets is creating strange alliances. Across the United States, state attorneys general and regulators are battling against both the federal government and prediction markets over whether event contracts should be considered “swaps” and therefore have to follow the Commodities Exchange Act, or instead be categorized as gambling, which is regulated by states.

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.”

In addition to disputing the idea that prediction markets offer swaps, Spagnuolo’s legal team argues that the US government had no jurisdiction over him in the first place because he’s a non-US citizen who was wagering on a non-US 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.