The US Attorney’s Office for the Southern District of New York unsealed the complaint against Michele Spagnuolo, 36 — also known by his Polymarket account alias “AlphaRaccoon” — on May 27, 2026. Spagnuolo, an Italian citizen residing in Switzerland, was arrested in New York and appeared before US Magistrate Judge Sarah Netburn, where he was released on a $2.25 million bond secured by $1 million in cash, per the DOJ’s official statement. He did not enter a plea.
Beginning in May 2024, Spagnuolo created a Polymarket account and began placing bets on contracts tied to which individuals would rank on Google’s most-searched list for 2025 — markets Polymarket launched last fall, per the complaint.
The Second Case In Thirty DaysThe Spagnuolo arrest is the second federal criminal case tied to Polymarket insider trading in just over a month. In April 2026, US Army Special Forces Master Sergeant Gannon Ken Van Dyke was arrested for allegedly using classified military knowledge of the planned capture of Venezuelan President Nicolás Maduro to place bets on Polymarket, reportedly netting more than $400,000. Van Dyke has pleaded not guilty, per CNN’s reporting.
Polymarket’s chief legal officer Olivia Chalos said in a statement that the company worked closely with the US Attorney’s Office and the CFTC on the Spagnuolo case — noting that Polymarket is the only prediction platform to date whose cooperation has led to insider trading charges in the United States, and that the blockchain-based nature of the platform means bad actors leave footprints.
This development marks a critical and accelerating moment for the nascent prediction market sector. Two federal insider trading arrests in thirty days — one involving military classified information, the other corporate search data — arriving simultaneously with an active congressional investigation into Polymarket and Kalshi, confirms that the legal perimeter around prediction markets is closing fast. The transparency of blockchain trading, once seen primarily as a feature for users, is now functioning as a forensic trail for federal prosecutors.
Cover image from Grok, ETHUSD chart from Tradingview
