Google engineer Michele Spagnuolo, who is accused of insider trading at Polymarket, has reportedly filed a motion seeking to dismiss his charges.
The Polymarket insider trading suspect allegedly made more than $1.2 million with the use of confidential information as an employee at Google. However, his defense is that he wasn’t manipulating a trade market at all; he was simply gambling.
Google Engineer Doesn’t (Exactly) Deny Polymarket Insider Trading Charges
People first heard of the disgraced Google engineer in June, when news broke that he had used inside information from his company to place winning bets at Polymarket.
Prosecutors say the trades occurred between October and December of 2025, and were related to markets dealing with Google’s most-searched people for that year. Spagnuolo’s access allowed him to project that singer D4vd would take the top spot, giving him an edge over people outside of Google.
At this point, though, Spagnuolo doesn’t deny the allegations. He used Google’s data and he placed the bets. The difference is he’s now using the ongoing legal battles between U.S. states and prediction markets to his advantage, saying his actions qualify as gambling, not insider trading.
Why This Creates a Problem for Prediction Markets
This news is a bit of a double whammy for Polymarket, as it could potentially make them look bad in the eyes of their other users, but it also could deliver a harsh blow to prediction markets in general.
That’s if Spagnuolo’s defense finds a way to deliver a convincing argument, at least.
Prediction markets have worked tirelessly in an effort to win the undying argument over what their product actually is. In the eyes of Polymarket, their event contracts are federally regulated derivatives that people can trade, not traditional bets that you’d see at sportsbooks.
Spagnuolo’s legal team is arguing just the opposite. His lawyers suggest event markets like the one he is accused of abusing should not be treated like financial swaps under commodities law.
Simply put; Spagnuolo can’t break rules that shouldn’t exist in the first place. If prediction market wagers are viewed as regular wagers instead of event market contracts, then he was merely gambling and not guilty of insider trading.
Are Prediction Market Contracts Financial Instruments or Wagers?
The problem with Spagnuolo’s creative defense is that it still doesn’t erase the fact that he used nonpublic information to profit financially.
Of course, Spagnuolo isn’t the first to infringe on event market trade rules. Nor is he the first to use gambling over insider trading as a defense. Gannon Ken Van Dyke, a Special Forces soldier accused of military insider trading, has attempted to argue that his actions aligned more with regular gambling, rather than commodities trading.
It isn’t so much that either defendant is right, but that they are poking holes in the armor of prediction markets. U.S. states are questioning whether Polymarket and other platforms should be able to operate the way they do, while Spagnuolo is doing everything possible to turn the prediction market legal landscape into a one-way ticket out of trouble.
The Trade Handle Prediction Markets Take
Spagnuolo’s case seems weak on the surface, as he still benefited from privileged information.
But it still points out the obvious; that prediction markets probably need a clear definition as to what they are. It’s unknown what the end result will be for prediction market sites, but with countless legal battles ongoing and a potential trip to the Supreme Court looming, a resolution will be here before you know it.
Even if it’s not the exact answer Polymarket desires, a set of established rules and a universally agreed upon definition of what prediction markets are will go a long way in eradicating what is presently a very blurred code of ethics.