Two brothers who studied at MIT were charged with exploiting a weakness in the Ethereum blockchain and stealing US$25 million in 12 seconds, in what prosecutors called a first-of-its-kind caper.
Anton Peraire-Bueno, 24, and James Peraire-Bueno, 28, were charged by federal prosecutors in Manhattan with fraud and money laundering offences. They are accused of carrying out the lightning-fast heist, plotted over the course of months, from their keyboards last year.
“The brothers, who studied computer science and math at one of the most prestigious universities in the world, allegedly used their specialised skills and education to tamper with and manipulate the protocols relied upon by millions of Ethereum users across the globe,” Damian Williams, the US attorney for the Southern District of New York, said in a statement.
The two studied at the Massachusetts Institute of Technology, with Anton graduating in February with a Bachelor of Science in computer science and math and James graduating with a Master of Science in aeronautics and astronautics in 2021.
Lawyers for the Peraire-Bueno brothers didn’t immediately respond to a request for comment. The brothers, who were arrested Tuesday in Boston and New York.
The US Justice Department has been focused on stamping out fraud and misconduct in the cryptocurrency industry, winning convictions of several high-profile industry executives, most notably Sam Bankman-Fried of FTX, who also went to MIT.
Ethereum is known as the biggest commercial highway in cryptocurrency, used by thousands of apps and focused on everything from finance to gaming.
The US says the brothers set up something called validators, which are designed to help order transactions on the Ethereum network and to help bots make money by facilitating arbitrage and other profitable trades.
Instead, they put their own validators in place to deceive the traders operating the bots, according to prosecutors.
They secured access to pending transactions and altered the movement of electronic currency to steal the cryptocurrency, the government alleges. The pair then moved the cryptocurrency through a web of transactions in an attempt to hide the source of the funds, according to the US.
The two allegedly spent months planning the heist, including studying the trading behaviours of Ethereum bots and setting up shell companies to operate behind.
They searched online for cryptocurrency exchanges with limited “know your customer” procedures they could use to launder their ill-gotten gains and even researched extradition procedures, prosecutors say.
