Google Engineer Accused of Polymarket Insider Trading Says He Was Just Gambling (wired.com) 76
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:5, Insightful)
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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...
Re:good luck with that (Score:4, Informative)
Re: good luck with that (Score:1)
A legal defense for an illegal act does not need to be logical im the "it makes common sense" way. An illegal act does not need to be criminal offense in "the state will prosecute and may send you to jail" sense.
Neither criminal nor civil offenses need to be prosecuted in "the state attorneys believe they can win the case... *and* its worth it for them to prosecute the case". (whether for them as an institution or a person)
The prosecutorial discretion and incentives are by design biased against the state fi
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In a phrase, you lied.
Re: good luck with that (Score:2)
Right... because my posting history and frequency matches spam / generated content. Obviously time traveling agent of Roko's basilisk and your incisive criticism of the elites triggered my defenses.
If more than one sentence challenges reading comprehension - I can simplify:
People can do things that are bad without being illegal, and people can do illegal things without being punished.
This is not a bad thing, its a hard-won feature of non-authoritarian governments. Tyrants love systems where the law is stri
Re: good luck with that (Score:2)
They literally made it legal for Congress. It's arguably still illegal for the president but a Republican Congress certainly isn't going to enforce that against a Republican president.
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We do, in fact, have a "rules for thee" state. It is, in fact, legal for congresspeople to perform insider trading and yet illegal for others to do so.
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Then explain our Congress and President insider trading being "legal".
Oh, that is easy: Might makes right.
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I agree with you and the OP. He will lose. And not because it's a "show trial." He just has an entirely specious defense against the charges.
He's not denying he made money with insider information. It's up to to the government to show he did, but it doesn't seem like that will be difficult. He worked at Google after all. He shouldn't be placing trades in the first place that could be called into question.
He's an Italian citizen living and working for Google in Zurich, Switzerland. And he thinks that protect
Re:good luck with that (Score:4, Insightful)
He was arrested when he arrived in New York City. He allegedly committed a crime on a platform whose headquarters are in a US jurisdiction, so he can face charges when he steps into that jurisdiction.
He might have a chance if this gets to SCOTUS as 4 of the 9 justices don't seem to understand what "subject to the jurisdiction of" means - and this Administration seems to be okay with insider trading. /s Of course, the DOJ simply dropping the charges after he makes a donation to this President is always a possibility. (sigh)
Supreme Court Upheld Birthright Citizenship, but Ruling Should Have Been Unanimous [brennancenter.org]
Insider trading allegations during the second Trump administration [wikipedia.org]
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Maybe. That will not protect him from Swiss law though. Maybe, if Google lets it go and signals to all employees that stealing corporate secrets to enrichen yourself is just fine. But that is about the only possibility I see.
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Why was it a secret? Is this a case of manufactured scarcity incentivizing arbitrage, so is your real problem with capitalism itself?
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What are you ranting about? If you know confidential information from your employer, you are NOT allowed to profit off it. You are also not allowed to publish it, etc. That is what the law says. This has nothing to do with capitalism.
Re: good luck with that (Score:2)
Gosh, I wonder why we'd need to make a law against behaving like Homo Economicus in a free-market system. I can't think of anything you could do to a free-market system that might cause that sort of problem.
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> That will not protect him from Swiss law though.
Which is 100% A-OK and entirely as it should be. As an Italian citizen in Switzerland he should never, under any circumstances, ever have been expected to follow, care about, or even know about, any US law. Literally the only laws he should be subject ther are Switzerland's and maybe Italy's. That's it. He should no more be obligated to follow any US law than I am to follow Saudi laws abor drinking or being gay or Chinese laws about advocating for dem
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But, I can make a guess as to why they would assert it, and it wouldn't have anyt
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I really think the United States should not be able to impose this kind of regulation on foreign entities.
It should be illegal, mind you, but it's probably something that should be enforced under the law of Switzerland or Panama.
If they don't have such laws, this would be a good wake up to get them, but the United States should not be the world's police for actions that don't directly injure US citizens.
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Switzerland or Italy. He's no more a Panamanian citizen than he is American.
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No. But I live in Switzerland. Anyways, insider trading is just as illegal in Switzerland and using corporate secrets to enrichen yourself is a major crime here. Hence I doubt he will fare any better if they allow him to go back.
As to extradition, the Swiss do not care about your citizenship in that, AFAIK. Polanski is not Swiss and they still refused to hand him over.
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Ok, I won't lie. The Hans I know is actually Swiss, and of at least average height.
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The Swiss were not aware. They are now. They will watch. Also, do you really think Google will let something like this go?
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And you think Google is fine with employees stealing their secrets to profit off them? At least in Switzerland, that is a major crime. And, obviously, he will have to give it all back on top of the sentence. Now, if that had all been kept quiet, he might have gotten away with it (but would still have lost the money), but it is out in the open and Google needs to send a message.
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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...
Maybe, but considering multiple US States have sued to regulate Polymarket as gambling, and a federal appeals court ruled that states hold the power to regulate these prediction contracts as gambling, then depending on how SCOTUS ultimately rules he might very well have a case that it was gambling. But as you stated, that just brings an entirely different set of laws and regulations into place, plus income from gambling is taxed as ordinary income subject to all standard income taxes (and pretty sure self-
Last time I checked (Score:2, Funny)
It's not gambling if you rig the game and eliminate chance.
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Also you would think that nobody that uses prediction markets would want people to bet on something with an insider trade.
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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
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Re: Last time I checked (Score:2)
Yes, we should consider the stock market to be gambling as it is designed now, since if it were for the purpose of investment they could reasonably charge a fee per trade.
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Yes, we should consider the stock market to be gambling as it is designed now, since if it were for the purpose of investment they could reasonably charge a fee per trade.
That depends on the service you receive.
Online brokerages used to charge trading fees, but no longer do, because market competition eliminated them. Now online brokerages make their money through interest on the cash they hold for you, payment for order flow (from market-makers, when the brokerage routes your trades), margin interest on money you borrow, and payment for premium services.
Investment in the stock market is not gambling because it's not a "one-and-done" transaction where you bet on an outcome a
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Investment in the stock market is not gambling because it's not a "one-and-done" transaction
You've never gambled, have you?
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It is watered down gambling, a value can be calculated for assets and you can hold assets. Real gambling has no underlying value.
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It's not gambling if you rig the game and eliminate chance.
Correct. That's called fraud.
Check Again. (Score:2)
It's not gambling if you rig the game and eliminate chance.
Correct. That's called fraud.
Congressional Insider Trading (a.k.a. Pelosis Law) become the golden standard of ethics by which our highest Representation of government decided to staunchly defend instead of vehemently denounce.
That's not fraud. That's a fucking job perk now.
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It's not gambling if you rig the game and eliminate chance.
Compare to a horse race, he didn't influence the outcome, he didn't feed the other horses laxatives.
He works in the stables and knows all the other horses have the shits, that's different.
You can call that unfair, to the honorable sport of gambling, but you knew before you played that this isn't a game of chance and anyone that knows more than you has an advantage. If this wasn't all a dumb game and was regulated like other securities, then trading with material non-public information would be illegal, beca
redefining insider trading (Score:5, Insightful)
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.
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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.
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Anyone in the world can see what the top searches are every day. Track that and you have the same data he did.
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You do not have to be an "insider" to perform an insider trade. You just have to be privy to insider information. Telling a friend or family member about insider information makes both of you culpable if someone trades on that information.
But if the information is available to everyone at the same time, then it's no longer "insider" information. Google Trends seems to qualify, unless Google insiders can see that information before it becomes public.
So, I think the definition of "insider trade" is still inta
"Just gambling" is not a valid excuse (Score:1)
As soon as he had insider information, it becomes criminal. Somehow this person does not strike me as very smart.
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> 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.
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You need to look up what a "fallacy" is.
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.
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I think the difference is, if anyone could have seen the horse limping, its okay. If you're the vet treating the sprained ankle behind closed doors, now it's material non-public information.
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Indeed. Or if that horse belongs to your employer and you are bound by confidentiality that way.
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If that horse belongs to your employer, yes.
Re: "Just gambling" is not a valid excuse (Score:2)
In this scenario, could anyone have stood where you stood when you saw the horse, or did you have special access? That's the differentiator.
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As soon as he had insider information, it becomes criminal.
Well, that's only half of it, and not the incriminating half. He has to trade on that information. Then the trade becomes criminal, not the insider knowledge.
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Actually, using any kind of confidential corporate information yourself in any way not restricted to your own mind, without authorization, is already criminal. You do not even need to enrichen yourself with it.
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You're reaching. Simply knowing insider information is not a crime. But acting on that information can be one.
And if a person obtains insider information in an unauthorized way, then that could be a crime, but the crime is not insider trading.
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Nope. The very act that this person used confidential information in a non-corporate approved way is already a crime. The insider trading is just the cherry on top, it is not needed for this to be criminal.
Also, why are you trying to defend this scumbag?
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Nope. The very act that this person used confidential information in a non-corporate approved way is already a crime. The insider trading is just the cherry on top, it is not needed for this to be criminal.
He didn't use the information until he performed the trade. The insider trade is the whole point, not the "cherry on top."
If he stole the information by accessing it in an unauthorized manner, then that's something. But I have seen nothing in the reporting of this story that indicates that happened. From what I can tell, he was simply privy to the information, and did not break any law to obtain it.
Again, simply knowing the information is not a crime. You might obtain or use this information in an illegal m
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That he did the trade is already a crime, whether the nature of the trade adds a crime or not.
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Kindly explain how simply knowing the information is a crime. Because that is what you claimed above:
As soon as he had insider information, it becomes criminal.
I'll bet you can't. Instead, you'll point to something he supposedly did to obtain the information. Which is not the same as simply knowing it.
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Do you really not understand how the requirement of keeping your employer's secrets and not profiting off them works? Seriously?
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Do you really not understand the difference between knowing one of your employer's secrets, and profiting off them?
I repeat: the fact that the guy knew something is Not. A. Crime. But trying to profit off them very well may be.
You asserted that by simply knowing something, the guy committed a crime. No: he had to do something with the information in order for a crime to occur.
We've gone back and forth several times on this point and you refuse to address it. At this point, I don't think you will. Over and o
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You asserted that by simply knowing something, the guy committed a crime.
Ah, I see: You are functionally illiterate! Because I have not done that at all.
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The wrinkle here is not that its just gambling. Its that its gambling that didn't even happen in the United States.
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But I do love the "No, I was gambling", argument. If I were his lawyer... well, I probably wouldn't be here at all, I'd be too busy getting rich with various lawyerings. But that aside, I'd suggest to the judge that they shouldn't rule on the gambl
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The original Polymarket website cannot be accessed legally from the USA, but the Polymarket US website can be accessed, and is regulated by the CFTC. Google Gemini provides this background info:
The original international Polymarket website is blocked for users in the United States, but the company launched a separate, federally regulated U.S. platform called Polymarket US that operates legally under the Commodity Futures Trading Commission (CFTC).
Current Status in the U.S.
International Site (Polymarket.com): Remains blocked or restricted for U.S. IP addresses following a 2022 regulatory settlement. Using a VPN to access it violates the platform's terms.
U.S. Platform (Polymarket.us): Operates legally at the federal level via a CFTC-regulated exchange.
State-Level Restrictions: While federally permitted, availability depends on your specific state. It is legal in over 40 states, but some states have pending legal challenges, cease-and-desist orders, or local restrictions against prediction markets.
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We said they couldn't operate that site in the US, and in the process gave up any authority over it. At least so far as I know.
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I surmised he didn't use Polymarket US. So, the question becomes whether Polymarket US offered the same contract that he bought on the international site. Specifically, contracts on Google "Year in Search" results. And the answer appears to be no: the offerings on Polymarket US are separate from those on the international site, and Google "Year in Search" contracts are not included.
We'll see whether that's an impediment to the government's case against him. My guess is maybe not, but I'm growing less certai
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Gambling? (Score:2)
If I 'predict' that 18 will fall on the Roulette and demonstrate that fact by placing a chip there, if I predicted right, I get 36 times the chip I bet, pardon, predicted.
Silly Rabbit, (Score:3)
corruption is for oligarchs!
Is this problem easily solvable? (Score:2)
Why doesn't google publish the top search item on a continuous basis like the debt clock?