DOJ accuses two MIT graduates of Ethereum heist that netted $25 million

Two brothers were taken into federal custody Tuesday for allegedly stealing approximately $25 million in cryptocurrency in just seconds. in a “first of its kind” manipulation of the Ethereum blockchain. The brothers — Anton Peraire-Bueno and James Peraire-Bueno — studied mathematics and computer science at MIT and used the skills they learned “at one of the most prestigious universities in the country” to exploit “the “the very integrity of the Ethereum blockchain in order to fraudulently obtain” the funds, prosecutors say. The brothers were accused of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.

“Unfortunately for the defendants, their alleged crimes were no match for Justice Department prosecutors and IRS agents, who dismantled this first-of-its-kind wire fraud and money laundering scheme” , said Deputy Attorney General Lisa Monaco in a press release.

Although the heist was carried out in seconds, the brothers spent months planning it, according to charging documents. The indictment claims the Peraire-Bueno brothers “carefully planned and executed” the attack, which began in December 2022. The brothers allegedly created “an online document” outlining their four-step plan: 1) The bait, 2) Remove the blindness of the attack. Block, 3) Search and 4) Propagation.

The brothers set up a series of Ethereum validators “in a manner that concealed their identities through the use of shell companies, cryptocurrency intermediary addresses, foreign exchanges, and a layer network of confidentiality,” according to the indictment. They allegedly targeted three traders – whose behavior they had studied months in advance, prosecutors say – and set up “a series of test transactions or ‘bait transactions’” to attract the bots used by the traders.

Prosecutors say the brothers exploited a vulnerability in Ethereum’s code that has since been patched. “In doing so, they fraudulently accessed pending private transactions and used this access to modify certain transactions and obtain their victims’ cryptocurrency,” the Justice Department press release claims.

After stealing approximately $25 million in cryptocurrency, the Peraire-Bueno brothers allegedly laundered the funds through several shell companies. The brothers’ online search history in the weeks following the alleged theft included “top crypto lawyers”, “how long does statue (sic) of limitations last”, “fraudulent access database to Ethereum” and “the statue (sic) of limitations on money laundering”. .” Charging documents claim that a victim and her attorney contacted the Peraire-Bueno brothers several times between April and June 2023, as did a representative of Ethereum.

If convicted, each faces up to 20 years in prison on each of three counts, according to the DOJ.