Two MIT-educated brothers are facing three charges after allegedly pulling off a sophisticated scheme that netted them $25 million. Prosecutors claim that the brothers targeted crypto trading bots on the Ethereum blockchain in a unique fraud scheme.
Boston resident Anton Peraire-Bueno, 24, and New Yorker James Pepaire-Bueno, 28, have been charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. The alleged scheme involved tricking three traders’ MEV bots, automated trading programs on Ethereum, into making a $25 million trade.
The brothers reportedly exploited a vulnerability in Flashbots, a software that conceals pending transactions on Ethereum. By using this exploit, they manipulated the pending transactions to acquire $25 million in stablecoins and other liquid tokens that the MEV bots had used to purchase illiquid tokens.
As a result, the MEV bots were left holding worthless tokens, unable to profit off their intended transactions. The brothers allegedly searched for ways to avoid accountability before and after the exploit, including researching topics like “how to wash crypto” and “top crypto lawyers.”
Deputy Attorney General Lisa Monaco stated that the brothers executed a technologically advanced scheme that took months to plan and mere seconds to carry out. The brothers were arrested and could face up to 20 years in prison for each count if found guilty.
The US Attorney for the Southern District of New York, Damian Williams, emphasized the seriousness of the alleged scheme and its implications for the integrity of the blockchain. The Department of Justice is committed to combating fraud in cryptocurrency markets and supporting victims impacted by such schemes.