Michele Spagnuolo, the Google engineer arrested in May for alleged insider trading on Polymarket, filed a motion Wednesday to dismiss all charges against him, according to a report from WIRED. His legal team isn't denying he profited from internal Google information — instead, they're arguing his bets were ordinary international gambling outside US jurisdiction, not financial instruments regulated by the Commodities Exchange Act. The case could force the Supreme Court to settle a nationwide battle over whether prediction markets count as regulated swaps or state-controlled gambling.
Spagnuolo, now on leave from Google, faces charges of commodities fraud, wire fraud, and money laundering after allegedly betting under the username "AlphaRaccoon" on Polymarket's main platform. The criminal complaint says he correctly predicted that singer D4vd — who became famous for his suspected link to a murder case and was later charged with homicide — would become Google's top-searched person in 2025, earning more than $1.2 million in total winnings. Spagnuolo was based in Zurich, Switzerland when he allegedly placed the trades on Polymarket, which is headquartered in New York but operates its flagship market through a Panama-based entity called Adventure One QSS that's banned from serving US customers.
Spagnuolo's lawyers claim that treating these wagers as swaps under the Commodities Exchange Act "would fly in the face of the statute's purpose and history" and produce "absurd results," potentially allowing any bet anywhere — from charity raffles to local Ping-Pong matches — to be classified as financial instruments. Financial services regulation expert Todd Phillips tells WIRED that "Spagnuolo is basically making the same argument as the states that are suing prediction markets," adding that "this is the issue that will likely go up to the Supreme Court." The defense also contends the US government lacks jurisdiction because Spagnuolo is not a US citizen and was betting on a non-US platform, while arguing the internal Google data he supposedly used held no commercial value for the company.
The motion comes as state attorneys general and regulators are battling federal authorities and prediction market operators nationwide over whether event contracts should be treated as "swaps" requiring federal oversight or as gambling subject to state regulation. CFTC chairman Michael Selig previously stated the agency can pursue extraterritorial jurisdiction involving offshore platforms in "extreme circumstances." Phillips notes the extraterritorial argument "is interesting and raises the question of whether the US should be the world's prediction markets cop." The outcome will likely set precedent for how aggressively US regulators can police prediction platforms operating overseas but accessible to users with inside information about American companies. The case puts competing visions of regulatory authority on a collision course, with prediction market platforms caught between federal agencies asserting broad reach and states defending their traditional control over betting.