Michele Spagnuolo, the Google engineer arrested in May by US 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 US 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.)
You might not expect the lawyers defending someone accused of felonies to agree with state prosecutors, but the vicious legal infighting over prediction markets is creating strange alliances. Across the United States, state attorneys general and regulators are battling against both the federal government and prediction markets over whether event contracts should be considered “swaps” and therefore have to follow the Commodities Exchange Act, or instead be categorized as gambling, which is regulated by states.
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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.”
In addition to disputing the idea that prediction markets offer swaps, Spagnuolo’s legal team argues that the US government had no jurisdiction over him in the first place because he’s a non-US citizen who was wagering on a non-US 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 US 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. Google did not respond to requests for comment.
The Commodity Futures Trading Commission, the federal agency tasked with regulating prediction markets, and Spagnuolo’s legal team also did not respond to requests for comment. CFTC chairman Michael Selig previously told WIRED that the agency has the ability to pursue extraterritorial jurisdiction in cases involving offshore platforms in “extreme circumstances.”
Spagnuolo was the second person publicly charged with alleged insider trading on Polymarket in the US. A month prior to Spanguolo’s arrest, Special Forces soldier Gannon Ken van Dyke was charged with allegedly making more than $400,000 from wagers on Polymarket connected to the raid on former Venezuelan leader Nicolás Maduro. Van Dyke’s defense team is also arguing for the charges to be dismissed because they say his activity should be classified as gambling and therefore not subject to federal commodities law.
Earlier this week, the CFTC—which filed a separate civil lawsuit against Van Dyke—repeatedly stressed in an amicus brief for the criminal case that his Polymarket events contracts were, indeed, swaps. It won’t be surprising if the CFTC does something similar in Spagnuolo’s case. By mounting this type of defense, the alleged insider traders have now inserted themselves directly into a much larger existential showdown over prediction markets.
