The U.S. Justice Department has charged a Google software engineer with using insider information to rig bets tied to Google’s most-searched list on prediction market Polymarket, earning $1.2 million in profits, according to a complaint unsealed on Wednesday May 27.
Michele Spagnuolo, a 36-year-old Italian citizen, allegedly used insider information to bet on long-shot candidates like indie pop musician D4vd, who appeared on Google’s most-searched list after he was arrested and accused of murdering a teenage girl, according to the complaint.
D4vd was the most-searched person of the year, according to Google statistics that were released on December 4, and Spagnuolo allegedly used insider information when betting on November 27 that D4vd would top the list.
The bet was particularly profitable because the markets placed a “near-zero probability” that D4vd would be the most-searched person on Google, according to the complaint.
Spagnuolo, on an account called “AlphaRaccoon,” also used insider information when placing other bets based on Google’s most-searched list, according to the complaint. He made a bet in October that rapper Kendrick Lamar would top the list, at a time when Google’s internal data showed that Lamar was on track to be the most-searched person of the year.
Reuters could not immediately identify an attorney for Spagnuolo.
Spagnuolo lives in Switzerland, according to the complaint, filed in the federal court in Manhattan.
U.S. Attorney for the Southern District of New York Jay Clayton said in a statement that prosecutors will pursue corporate insiders who seek to use confidential business information to turn a 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 said in a statement that it is working with law enforcement and 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 said that it helped law enforcement investigate Spagnuolo’s activity, and it is the only prediction platform to date whose cooperation has led to insider trading charges in the United States.
Federal prosecutors in April charged a U.S. Army soldier with using classified information to place Polymarket bets on the capture of Venezuelan leader Nicolas Maduro.
Source: Reuters
