MIT-educated brothers are arrested for ‘stealing $25 million in cryptocurrency in 12 seconds’ in cutting-edge scheme targeting Ethereum blockchain

• Two MIT-educated brothers arrested for allegedly stealing $25 million in crypto
• The fraud involved manipulating pending transactions in just 12 seconds
• Pair studied computer science & maths at MIT, rejected pleas to return the funds

Two brothers who studied at the Massachusetts Institute of Technology have been arrested following claims they carried out a cutting-edge scheme to exploit the Ethereum blockchain’s integrity and steal $25 million worth of cryptocurrency.

Federal prosecutors in Manhattan called the scheme allegedly perpetrated by Anton Peraire-Bueno, 24, and James Peraire-Bueno, 28, ‘novel’ and said the case marked the first time that such a fraud had ever been the subject of U.S. criminal charges.

Authorities believe they executed their elaborate heist in April 2023, claiming the pair stole $25 million from traders in just 12 seconds by fraudulently gaining access to pending transactions and altering the movement of cryptocurrency.

‘As we allege, the defendants’ scheme calls the very integrity of the blockchain into question,’ U.S. Attorney Damian Williams said.

An indictment charged them with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. 

Anton Peraire-Bueno was arrested in Boston, while James Peraire-Bueno was arrested in New York.

Both brothers had attended Cambridge, Massachusetts-based MIT, where according to prosecutors they studied computer science and math and developed the skills and education they relied upon to carry out their fraud.

The indictment alleged that for months, the Peraire-Bueno brothers plotted to manipulate and tamper with the protocols used to validate transactions for inclusion on the Ethereum blockchain, a public ledger that records each cryptocurrency transaction.

Prosecutors said they did so by exploiting a vulnerability in the code of software called MEV-boost that is used by most Ethereum network ‘validators,’ who are responsible for checking that new transactions are valid before they are added to the blockchain.

It is believed that after carrying out the heist, the brothers rejected requests to return the funds and instead took steps to launder and hide the stolen cryptocurrency.

Over the course of several months the brothers learned the trading behaviors of the victim traders whose cryptocurrency they ultimately stole. 

As they planned the supposed heist, they allegedly also took numerous steps to conceal their identities and lay the groundwork to conceal the stolen proceeds, including by setting up shell companies and using multiple private cryptocurrency addresses and foreign cryptocurrency exchanges, prosecutors say. 

After allegedly stealing the crypto, it is claimed the brothers transferred the stolen cryptocurrency through a series of transactions designed to conceal the source and ownership of the stolen funds. 

The pair are believed to have also searched online for information about how to carry out the scheme and find ways to conceal their involvement. 

U.S. Attorney Damian Williams said: ‘The brothers, who studied computer science and math at one of the most prestigious universities in the world, allegedly used their specialized skills and education to tamper with and manipulate the protocols relied upon by millions of Ethereum users across the globe. 

‘Once they put their plan into action, their heist only took 12 seconds to complete. This alleged scheme was novel and has never before been charged. But as the Indictment makes clear, no matter how sophisticated the fraud or how new the techniques used to accomplish it, the career prosecutors of this Office will be relentless in pursuing people who attack the integrity of all financial systems.’ 

‘The brothers stole $25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme they plotted for months and executed in seconds,’ Deputy Attorney General Lisa Monaco said.

‘Unfortunately for the defendants, their alleged crimes were no match for Department of Justice prosecutors and IRS agents, who unraveled this first-of-its kind wire fraud and money laundering scheme. As cryptocurrency markets continue to evolve, the Department will continue to root out fraud, support victims, and restore confidence to these markets.’

IRS-CI Special Agent in Charge Thomas Fattorusso explained: ‘In this case, IRS-CI New York’s Cyber Unit simply followed the money. Regardless of the complexity of the case, we continue to lead the effort in financial criminal investigations with cutting-edge technology and good-ole-fashioned investigative work, on and off the blockchain.’