Two U.S. brothers have been indicted for masterminding a scheme to steal $25 million in cryptocurrency using the Ethereum blockchain. The alleged crime, which was carried out in just seconds, highlights the sophisticated tactics used by criminals in the ever-evolving digital currency space. Prosecutors also bluntly stated that such crimes also call into question the integrity of Ethereum.
Two US brothers arrested for manipulating Ethereum transactions
Damian Williams, U.S. Attorney for the Southern District of New York, announced the indictment against two brothers, Anton Peraire-Bueno and James Peraire-Bueno. The brothers face 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 and will appear before U.S. Magistrate Judges in their respective districts.
The first case related to Ethereum MEV
Two brothers fucked up the MEV robot
The indictment accuses Anton and James Peraire-Bueno of using their computer science and mathematics expertise to manipulate the Ethereum blockchain. They allegedly accessed pending transactions, tampered with those transactions, and stole $25 million worth of cryptocurrency in 12 seconds. The approach is considered unprecedented and highlights vulnerabilities in blockchain technology.
The brothers took the following steps to plan and execute the exploit:
(a) Establish a series of Ethereum validators, overseas exchanges and privacy layer networks by using shell companies, intermediary cryptocurrency addresses to hide their identities
(b) Deploy a series of test transactions or "bait transactions" designed to identify MEV bots most likely to attract exploit victims (collectively, victim traders)
(c) Identify and exploit a vulnerability in the MEV-Boost relay code that causes the relay to prematurely release the entire contents of a proposed block;
(d) Reorder the proposed block in favor of the defendant
and (e) publishing reordered blocks to the Ethereum blockchain, which resulted in the victim trader stealing approximately $25 million in cryptocurrency.
The theft plan was meticulous, prosecutors said it was the first of its kind
The Peraire-Bueno brothers carefully planned their theft for months. They study their victims' trading behavior and take a variety of measures to hide their identities, including setting up shell companies, using private cryptocurrency addresses, and conducting transactions through foreign exchanges to conceal the origin of the stolen funds.
After the theft, the brothers used a series of deals to hide their ill-gotten gains. They also scoured online for discussions about how to carry out the theft, conceal their involvement and deal with legal consequences, showing detailed planning for the crime.
U.S. Attorney: Ethereum’s integrity is in question
U.S. Attorney Damian Williams emphasized the seriousness of the crime, saying, "The defendants' scheme cast doubt on the integrity of the blockchain. Despite the sophistication of their methods, our prosecutors are fearless in pursuing those who attack the financial system." .
Thomas Fattorusso, Special Agent in Charge of the IRS-CI New York Office, noted the innovative nature of the crime. He said: "The brothers manipulated the Ethereum blockchain, which was an unprecedented fraud. Our team tracked the flow of funds, combining advanced technology with traditional investigations."
The brothers could face up to 20 years in prison
Anton, 24, and James Peraire-Bueno, 28, were charged with conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering. Each charge carries a maximum penalty of 20 years in prison. The sentence will be determined by the judge based on the specific circumstances of the case.
But the person who traps someone is not guilty, but he is arrested only if he breaks the trap?
MEV has always been a controversial part of the blockchain, and Ethereum is also trying to solve this problem, because the transaction ordering of the blockchain can be manipulated to a certain extent, resulting in unfair transactions. The MEV-boost that was attacked this time is the software that attempts to standardize MEV, and is also the main infrastructure for finding profitable transactions on the chain.
The Peraire-Bueno brothers were arrested for destroying MEV-boost. However, isn't it unfair for MEV-boost to obtain profits from on-chain transactions?
(Vitalik’s long article responded to concerns about Ethereum’s decentralization: MEV, liquid staking and hardware thresholds)
(Coinbase Cloud is connected to MEV-Boost, and ETH pledgers can obtain MEV income)
*Note: The charges in the indictment are only accusations, and the defendants are presumed innocent until proven guilty. *
This article stole 25 million mg in 12 seconds! Two brothers in the United States were arrested for overturning the MEV robot for the first time. Prosecutors: The integrity of Ethereum is questioned first appeared on Chain News ABMedia.
