Two brothers educated at MIT are facing trial for allegedly stealing $25 million in cryptocurrency, claiming their actions were legal maneuvers against automated trading bots.
Federal prosecutors have charged two brothers, Anton Peraire-Bueno, 25, and James Peraire-Bueno, 29, with orchestrating a sophisticated cryptocurrency theft, accusing them of exploiting the Ethereum network to steal $25 million in a matter of seconds. Authorities are labeling the scheme as unprecedented in the realm of digital finance.
The brothers, however, maintain that their actions were not illegal. Their defense argues that they merely outsmarted what they describe as “predatory” automated trading bots. They contend that their actions were a clever strategy within the competitive and often chaotic landscape of cryptocurrency trading, rather than criminal behavior.
This defense is expected to be presented when their trial opens in Manhattan federal court on Tuesday. If convicted of conspiracy, wire fraud, and money laundering, the brothers could face up to 20 years in prison for each count. The trial occurs amid increasing scrutiny of the cryptocurrency industry, as the Trump administration seeks to implement tighter regulations.
Prosecutors allege that the brothers spent months preparing for the heist, executing a rapid 12-second exploit on the Ethereum blockchain in April 2023. They claim the scheme was meticulously planned, citing online searches the brothers allegedly conducted for terms like “how to wash crypto” and “top crypto lawyers.”
At one point, prosecutors noted that the brothers even searched for “Money launder statue of limitations,” mistakenly spelling “statute” as “statue.”
According to the prosecution, the brothers set up “bait transactions” to identify three target traders and analyze the operation of their bots. Once they gathered sufficient information, they allegedly lured the bots into a carefully timed trap.
Prosecutors assert that the brothers crafted an appealing package of crypto trades that they knew the victims’ bots would find irresistible. After the bots took the bait, the brothers reportedly triggered the trap, exploiting a software vulnerability that allowed them to access private transaction data and manipulate the trades in a bait-and-switch tactic. Instead of the anticipated profits, the victims discovered that their $25 million had been redirected into a collection of nearly worthless, illiquid tokens.
To conceal their identities and the location of the stolen funds, prosecutors allege that the brothers routed the money through shell companies, multiple crypto wallets, and overseas exchanges. The entire theft allegedly unfolded in just 12 seconds, during the brief window between when a cryptocurrency trade is initiated and when it is permanently recorded on the blockchain.
“Using the specialized skills developed during their education, as well as their expertise in cryptocurrency trading,” the brothers “exploited the very integrity of the Ethereum blockchain,” prosecutors stated in a 19-page indictment. The indictment claims that they “manipulated and tampered with the process and protocols by which transactions are validated and added to the Ethereum blockchain.”
In doing so, they allegedly fraudulently accessed pending private transactions and used that access to alter transactions and obtain their victims’ cryptocurrency.
During a hearing on Thursday, prosecutors indicated that the brothers’ legal team has expressed no intention of negotiating a plea deal. Instead, the defense plans to vigorously contest the prosecution’s claims during the trial before a jury.
In oral arguments presented in June, Patrick Looby, attorney for James Peraire-Bueno, argued before U.S. District Court Judge Jessica G. L. Clarke that “there’s no central authority” overseeing the Ethereum blockchain. He emphasized that “there’s no government regulations,” asserting that economic incentives guide the behavior of parties involved.
Earlier this year, in an attempt to dismiss the indictment, the defense attorneys contended that the alleged victims lost their cryptocurrency “through pre-programmed trades without ever interacting with the Peraire-Buenos, directly or indirectly.”
They further argued that prior to this indictment, no Ethereum user would have understood that thwarting a predatory attempt by bots engaged in market manipulation could lead to criminal charges. “No court has ever applied these statutes to similar transactions,” they claimed, asserting that the Peraire-Buenos had no reason to believe their actions could be deemed unlawful.
The outcome of this high-profile case could have significant implications for the cryptocurrency industry, particularly as regulatory frameworks continue to evolve.
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