The Justice Department charged a software engineer at Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL)-owned Google on Wednesday with allegedly profiting over $1 million on Polymarket by misusing confidential information.

Insider Trading In Google?

Michele Spagnuolo, an Italian citizen residing in Switzerland, was charged with commodities fraud, wire fraud, and money laundering, according to a DOJ press release.

The complaint stated that Spagnuolo had access to Google’s internal software tool, which provided him with confidential company information.

He created an account on Polymarket, a Polygon (CRYPTO: POL)-based prediction market, with a pseudonym "AlphaRaccoon,” and placed several bets related to Google’s internal information. When the information was finally made public, he profited roughly $1.2 million on all his wagers.

“The FBI remains committed to hunting down fraudsters who betray their employer for personal financial gains,” stated FBI Assistant Director in Charge James C. Barnacle, Jr.

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Google Responds

Google has put Spagnuolo on leave and is taking appropriate action, a company spokesperson told Benzinga. The spokesperson added that using confidential information to place bets is a serious breach of the company’s policies.

Polymarket said its “market integrity infrastructure” flagged Spagnuolo’s suspicious trades, leading to his arrest by the authorities.

Scrutiny Grows For Prediction Markets

The case lands amid intense scrutiny over insider trading on prediction markets.

A U.S. soldier was charged last month for allegedly using classified information to profit on a Polymarket bet linked to Venezuela’s ousted leader, Nicolás Maduro. The soldier had a role in planning and executing the military operation, which gave him access to “sensitive” information.

Congressional opposition has intensified. Last month, the Senate unanimously passed a resolution banning Senators, Officers, and staff from participating in prediction markets. Bipartisan legislation has also been introduced to extend the ban across the entire executive branch.

Arthur Hayes, Chief Investment Officer at Maelstrom Fund, meanwhile, backed insider trading in prediction markets, saying people will make better calls when information flows freely.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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