US Brothers Arrested for Ethereum Exploit and $25 Million Theft

Brothers Anton and James Perayre-Bueno have been arrested in Boston and New York, respectively, on charges of exploiting the Ethereum blockchain and stealing $25 million in cryptocurrency.

According to a press release, they face charges of conspiracy to commit wire fraud and money laundering.   

“These brothers allegedly executed a first-of-its-kind manipulation of the Ethereum blockchain, fraudulently accessing pending transactions, altering the flow of electronic currency, and ultimately stealing $25 million in cryptocurrency from their victims,” stated IRS Criminal Investigation Special Agent Thomas Fattorusso.

Prosecutor Damian Williams noted that the accused, who studied mathematics and computer science “at one of the world’s most prestigious universities,” used their knowledge “to compromise the integrity of the blockchain.” The attack itself took approximately 12 seconds, and the scheme employed by the brothers is being charged for the first time, he added.

The plan devised by the brothers targeted MEV bot operators specializing in arbitrage. To execute it, they acquired 16 Ethereum validator accounts, investing 529.5 ETH (~$880,000) for this purpose.

In the initial phase, the accused conducted a series of test transactions to identify which assets MEV traders focused on for profit extraction.

To lure victims, the brothers used “bait transactions” — operations involving the purchase of certain low-liquidity tokens. The prices of such assets are easier to manipulate, making them attractive for “sandwich attacks”.

Once one of their validator accounts was selected to confirm a block, the brothers executed the main part of their scheme. Three traders included in transaction bundles the purchase of tokens before the “bait” and immediately after — selling at the anticipated higher price.

However, the brothers manipulated the process to place their transaction higher, replacing the purchase of coins with a sale. As a result, they obtained $25 million in stablecoins and liquid cryptocurrencies for the “junk” tokens they previously held. The victims were left with devalued assets.

Following the exploit, the accused attempted to launder the stolen funds through a series of transactions.

Authorities noted that in planning the scheme, the brothers searched online for information on how to conceal their involvement and cover their tracks, showing interest in exchanges without verification. They also inquired about lawyers experienced in cryptocurrency and extradition cases.

If convicted, Anton and James Perayre-Bueno face up to 20 years in prison.

“As clearly stated in the indictment, no matter how sophisticated the fraud or novel the methods used to commit it, prosecutors will relentlessly pursue individuals who attack the integrity of any financial systems,” emphasized Prosecutor Williams.

In November 2023, a Uniswap liquidity pool creator lost over $700,000 in seconds following a surge of MEV bots.