Ethereum
Brothers stole $25 million from Ethereum MEV bots, prosecutors say – DL News
- Two brothers face three charges after allegedly carrying out a ‘spike scheme’.
- The alleged fraud involved tricking three traders’ MEV bots into making a $25 million trade, according to prosecutors.
Two MIT-educated brothers pocketed $25 million in a “new scheme” targeting crypto trading bots on the Ethereum blockchain, according to US prosecutors.
In a charge Unsealed Wednesday, prosecutors charged Anton Peraire-Bueno, 24, of Boston, and James Pepaire-Bueno, 28, of New York, with conspiracy to commit wire fraud, wire fraud and conspiracy to commit commit money laundering.
“Defendants’ scheme calls into question the very integrity of blockchain,” Damian Williams, U.S. Attorney for the Southern District of New York, said in a statement. statement.
“This alleged scheme was new and has never been charged before.”
Anton Peraire-Bueno did not immediately respond to a DL News investigation.
The alleged scheme took advantage of three traders’ MEV bots – automated trading programs based on Ethereum that scan the blockchain for profitable opportunities to accelerate pending transactions.
The brothers also exploited a vulnerability in Flashbotssoftware that hides pending transactions on Ethereum to limit the effectiveness of MEV bots, prosecutors say.
Through this alleged scheme, the brothers tricked the three traders’ MEV bots into purchasing illiquid tokens worth $25 million, according to prosecutors.
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Using the Flashbots exploit, the brothers then falsified ongoing transactions to acquire the $25 million in stablecoins and other more liquid tokens that the MEV bots had used to purchase the illiquid tokens, prosecutors allege.
The MEV bots, which thought they could profit from purchasing illiquid tokens by immediately selling them at a premium price, were left holding the bag, according to the indictment.
“As a result of these actions, the victims’ final sales transactions could not occur,” the indictment states. “The illiquid cryptocurrencies that Victim Traders purchased in the initial transactions have been rendered effectively worthless.”
In the months before and after the exploit, the brothers had sought ways to escape responsibility, prosecutors said. Among other things, their web searches allegedly included “how to wash crypto”, “cefi exchanges without kyc”, “best crypto lawyers”, and “wire fraud status / statute of limitations for wire fraud “.
“As today’s indictment alleges, the Peraire-Bueno brothers stole $25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme that they plotted for months and executed in seconds,” Assistant Attorney General Lisa Monaco said in the release.
“As the cryptocurrency markets continue to evolve, the Department will continue to root out fraud, support victims, and restore trust in these markets.”
The brothers were arrested Tuesday, according to prosecutors. If the brothers are convicted, they face a maximum sentence of 20 years in prison on each count.
Aleks Gilbert is DL News‘ DeFi correspondent based in New York. You can contact him at aleks@dlnews.com.