Google engineer arrested for alleged insider trading on Polymarket claims his activity was gambling, not securities trading subject to US law.
Regulation & Gov ·
Michele Spagnuolo, a Google engineer arrested in May for alleged insider trading on Polymarket, has filed a motion to dismiss the charges by arguing his activity constituted gambling rather than securities trading subject to US law. Using the alias "AlphaRaccoon," Spagnuolo allegedly made wagers totaling over $1.2 million in profit, including a bet that a singer named D4vd would be Google's most-searched person in 2025. He faces charges of commodities fraud, wire fraud, and money laundering.
Spagnuolo's legal team argues that prediction market contracts should be classified as gambling—regulated by states—rather than financial swaps subject to the Commodities Exchange Act. The defense contends that classifying wagers on searches or other events as financial instruments would produce "absurd results," potentially covering charity raffles and local games. The team also claims the US lacks jurisdiction over a non-citizen living in Switzerland who wagered on a platform headquartered outside the country.
The case reflects a broader regulatory dispute: state attorneys general and federal agencies are fighting over whether prediction markets qualify as swaps or gambling. Whether Spagnuolo's jurisdictional arguments succeed remains unclear, as does the underlying question of whether Polymarket's contracts fall under federal commodity law or state gambling regulation—a tension that may eventually reach the Supreme Court.