12 seconds to steal 25 million euros! Two brothers in the U.S. arrested for using MEV bot, prosecutor: Ethereum integrity questioned

Two brothers in the United States have been indicted for planning to steal $25 million in cryptocurrency using the Ethereum blockchain. The alleged crime, which was completed in just a few seconds, highlights the sophisticated methods that criminals are employing in the rapidly evolving digital currency space. Prosecutors also stated that such crimes raise questions about the integrity of Ethereum.

Two Brothers Arrested for Manipulating Ethereum Transactions in the U.S.

U.S. Attorney Damian Williams in the Southern District of New York announced the public release of the indictment against brothers Anton Peraire-Bueno and James Peraire-Bueno. The brothers are facing charges of conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. They were arrested in Boston, Massachusetts, and New York City, respectively, and will appear before U.S. district judges in their respective areas.

First Case Related to Ethereum MEV

Brothers Manipulate MEV Bots

The indictment accuses Anton and James Peraire-Bueno of manipulating the Ethereum blockchain using their expertise in computer science and mathematics. They are alleged to have accessed pending transactions, tampered with these transactions, and stole $25 million worth of cryptocurrency within 12 seconds. This method is considered unprecedented and highlights vulnerabilities in blockchain technology.

The brothers took the following steps to plan and execute the exploit:

a Creating a series of Ethereum validators, offshore exchanges, and privacy layer networks using shell companies, intermediate cryptocurrency addresses to conceal their identities

b Deploying a series of test transactions or "bait transactions" to identify MEV bots most likely to be lured as exploit victims, collectively referred to as victim traders

c Identifying and exploiting vulnerabilities in the MEV-Boost relay code, which prematurely releases the entire content of the proposed block

d Reordering the blocks of the proposed block to benefit the defendants

e Publishing the reordered blocks to the Ethereum blockchain, resulting in the theft of approximately $25 million in cryptocurrency by victim traders.

Elaborate Theft Scheme, Prosecutor Calls It a First

The Peraire-Bueno brothers meticulously planned their theft operation for months. They studied the trading behaviors of victims and took various measures to conceal their identities, including setting up shell companies, using private cryptocurrency addresses, and conducting transactions through foreign exchanges to mask the source of the stolen funds.

After the theft, the brothers used a series of transactions to conceal their illicit gains. They also searched online for various discussions on how to execute the theft, conceal their involvement, and deal with legal consequences, demonstrating detailed planning of their premeditated crime.

U.S. Prosecutor: Ethereum Integrity Questioned

U.S. Attorney Damian Williams emphasized the severity of the crime, stating, "The defendants' scheme raises questions about the integrity of the blockchain. Despite their sophistication, our prosecutors are fearless in pursuing those who attack the financial system."

Special Agent Thomas Fattorusso of the IRS-CI New York Field Office highlighted the innovation in this crime. He stated, "The brothers manipulated the Ethereum blockchain in an unprecedented fraudulent scheme. Our team traced the flow of funds, combining advanced technology and traditional investigative methods."

Brothers Face Up to 20 Years in Prison

Anton, 24, and James Peraire-Bueno, 28, are charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. Each charge carries a maximum sentence of 20 years in prison. Sentencing will be determined by the judge based on the specifics of the case.

Are the Accused Innocent, Only Caught for Breaking the Trap?

MEV has long been a controversial part of blockchain, and Ethereum has been trying to address this issue as transaction ordering on the blockchain can be manipulated to result in unfair transactions. The attacked MEV-Boost is software attempting to standardize MEV and serves as the primary infrastructure for sandwich attacks to find profitable transactions on the chain. There is community discussion suggesting that the Peraire-Bueno brothers were caught for disrupting MEV-Boost, but isn't profiting from on-chain transactions through MEV-Boost also an unfair practice?

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*Note: The charges in the indictment are only allegations, and the defendants are presumed innocent until proven guilty.*