MIT Brothers Face Trial Over $25 Million Ethereum Fraud Scheme

According to Cointelegraph, two brothers with MIT backgrounds, Anton and James Peraire-Bueno, are set to face trial after a U.S. District Judge denied their motion to dismiss fraud charges related to a $25 million cryptocurrency theft. The charges stem from allegations that the brothers exploited a vulnerability on the Ethereum blockchain to execute a fraudulent scheme, targeting victim traders. U.S. District Judge Jessica Clarke ruled that the government sufficiently alleged that their actions met the criteria for fraud, despite the novel methods employed. The federal government initially charged the brothers in May 2024, accusing them of using their computer science expertise to manipulate maximal extractable value (MEV) bots. These bots are designed to front-run transactions for profit by exploiting price differences or predictable movements visible in the mempool. The indictment detailed a four-step plan—bait, block, search, and propagation—where the brothers allegedly used 529.5 ETH to establish 16 Ethereum validators and execute lure transactions to attract the bots. The scheme reportedly netted them the substantial sum in just 12 seconds. In their defense, the brothers argued that the wire fraud statute did not provide fair notice that their conduct was criminal, asserting that their actions were permissible under the system's code. They also claimed that they were unfairly targeted, as the trading bots of their victims allegedly engaged in manipulative practices themselves. Despite these arguments, the court maintained the charges, although prosecutors dropped one charge of conspiracy to receive stolen property after the brothers referenced a Department of Justice memo on avoiding regulatory overreach in digital assets. The case remains in the pre-trial motions phase, with a trial scheduled for October 2025. The brothers face serious charges, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. These charges typically carry significant penalties, including substantial prison sentences and fines. As the legal proceedings continue, the case highlights ongoing challenges in regulating and prosecuting digital asset-related crimes.