The US Department of Justice has charged a Google software engineer with using insider information to manipulate bets on the prediction market Polymarket, earning $1.2 million in profits, according to a complaint unsealed on Wednesday.
Details of the Charges
Michele Spagnuolo, a 36-year-old Italian citizen, allegedly used confidential data to place bets on long-shot candidates appearing on Google's most-searched list. The complaint states that Spagnuolo bet on indie pop musician D4vd, who topped the list after being arrested and accused of murdering a teenage girl. D4vd was named the most-searched person of the year on December 4, and Spagnuolo placed his bet on November 27, using insider knowledge.
The bet was especially profitable because the market assigned a "near-zero probability" to D4vd becoming the most-searched person, according to the complaint.
Additional Bets
Under the account name "AlphaRaccoon," Spagnuolo also placed other bets based on Google's internal data. In October, he bet that rapper Kendrick Lamar would top the list, at a time when Google's data indicated Lamar was on track to be the most-searched person of the year.
Reuters could not immediately identify an attorney for Spagnuolo, who lives in Switzerland. The complaint was filed in federal court in Manhattan.
Statements from Officials
Jay Clayton, the US attorney for the southern district of New York, stated that prosecutors will pursue corporate insiders who misuse confidential business information for profit in prediction markets. "Insider trading compromises the integrity of our markets, and the American people want this greed-driven conduct investigated and prosecuted," Clayton said.
Google confirmed it is cooperating with law enforcement and emphasized that using confidential information to place bets is a serious breach of company policy. Spagnuolo has been placed on leave, according to a Google spokesperson.
Polymarket stated that it assisted law enforcement in investigating Spagnuolo's activities, marking the first time a prediction platform's cooperation has led to insider trading charges in the United States.
Previous Case
In April, federal prosecutors charged a US Army soldier with using classified information to place Polymarket bets on the capture of Venezuelan leader Nicolás Maduro.
