MIT brothers' $25M Ethereum case could redefine crypto fraud laws
Since May 2024, a federal court in Manhattan has been hearing a case against two graduates of the Massachusetts Institute of Technology (MIT) accused of stealing roughly $25 million in crypto assets.
According to the indictment, Anton and James Peraire-Bueno spent months preparing an operation to steal about $25 million worth of ETH, and the theft itself took no more than 12 seconds. A former trader at the trading firm 18decimal, Travis Chen, testified in court and walked jurors through the operation’s preparation (referred to in court papers as “Omakase”). The alleged exploit involved a series of very rapid transactions that prosecutors say took advantage of vulnerabilities in the Ethereum network. Prosecutors also note that the brothers were validators on the Ethereum blockchain, which, they argue, enabled the method used.
These brothers allegedly committed a first-of-its-kind manipulation of the Ethereum blockchain by fraudulently gaining access to pending transactions, altering the movement of the electronic currency, and ultimately stealing $25 million in cryptocurrency from their victims,said Special Agent in Charge Thomas Fattorusso of the IRS Criminal Investigation (IRS-CI) New York Field Office.
As previously reported, prosecutors say the actions were carefully planned and malicious. The brothers, who studied computer science at a top university, are accused of using specialized knowledge to manipulate protocols relied on by millions of Ethereum users. They allegedly tested transaction sequences over time, sought ways to convert and disguise transfers, and developed tactics that misled automated MEV bots.
The defence argues the activity was a novel trading strategy based solely on publicly available blockchain data and did not deceive people: the brothers allegedly used technical skills to out‑trade automated bots. They sold illiquid tokens in exchange for stablecoins and more liquid assets, leaving sandwich‑bot operators holding worthless tokens.
The defendants face charges of conspiracy, wire fraud and money laundering. Each count carries up to 20 years in prison. The trial is expected to last several more weeks, and the brothers have so far rejected offers to plead guilty.
From a legal standpoint, this is a new and contested question about how U.S. law applies to blockchain-based trading and access. In the US, criminal liability usually requires proof of intent: an intention to defraud, to deprive someone of property, or to cause harm. In this case, prosecutors seek to rely on money‑laundering statutes or the Computer Fraud and Abuse Act (CFAA). However, courts have often been reluctant to extend the CFAA to mere violations of access rules or to exceedingly broad readings of authorized access – distinctions that are central to the arguments in this case.
If the brothers’ actions are deemed aggressive but lawful trading based on public data, the defence will have a strong argument. However, if the court finds proof of deliberate deception and appropriation of others’ funds, their conduct would constitute a crime.
