On 27 May 2026, the United States Attorney for the Southern District of New York unsealed a criminal complaint against Michele Spagnuolo, 36, an Italian national residing in Switzerland who worked as a staff software engineer at Google. Spagnuolo faces three counts: commodities fraud under 7 U.S.C. Section 9(1) and 17 C.F.R. Section 180.1, wire fraud under 18 U.S.C. Section 1343, and money laundering under 18 U.S.C. Section 1956. He appeared before a federal magistrate in New York and was released on a $2.25 million bond. The Commodity Futures Trading Commission (CFTC) simultaneously filed a civil enforcement action.
The CFTC's authority over prediction market event contracts derives from Section 4c of the Commodity Exchange Act (7 U.S.C. Section 6c), which governs transactions in commodity interests including contracts of sale. The complaint alleges that Spagnuolo misappropriated material, non-public information from Google in breach of his duty of loyalty and confidentiality. He then used that information to trade event contracts on Polymarket, meeting the elements of the misappropriation theory of commodities fraud. Spagnuolo allegedly accessed confidential internal data about Google's Year in Search report, identifying the most-searched celebrities. He placed approximately $2.75 million in bets on related Polymarket contracts between 15 October and 4 December 2025, generating approximately $1.2 million in profit.
Prediction market platform operators now face heightened scrutiny of know-your-customer procedures and market surveillance obligations following this enforcement action. Technology company employees who trade on prediction markets using internal corporate information face explicit CFTC and DOJ enforcement risk under the misappropriation theory extended to commodity markets. Platforms comparable to Polymarket may receive regulatory pressure to implement trading controls that identify patterns consistent with information asymmetry between traders.
The CFTC's civil case seeks trading bans, disgorgement of approximately $1.2 million in profits, and civil monetary penalties. The criminal complaint, rather than a formal indictment, means Spagnuolo's formal charges remain subject to grand jury action. A maximum sentence of 50 years applies across all three counts if conviction is obtained. This case is the first publicly charged instance of the misappropriation theory of commodities fraud applied to a prediction market platform, establishing an enforcement precedent.
Licentium advises prediction market operators and digital asset platforms on CFTC regulatory strategy, compliance program design, and cross-border enforcement risk. Work we undertake includes prediction market regulatory analysis, CFTC registration and compliance, commodity interest classification, market surveillance program design, and enforcement response advisory.