Two brothers manipulated Ethereum protocols to steal $25M — Justice Dept

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Authorities with the United States Department of Justice have unsealed an indictment alleging that two individuals stole $25 million in cryptocurrency in a scheme that “exploit[ed] the very integrity of the Ethereum blockchain.”

In a May 15 notice, the Justice Department charged brothers Anton Peraire-Bueno and James Pepaire-Bueno with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. According to U.S. officials, the brothers fraudulently obtained $25 million worth of crypto “within approximately 12 seconds” using a scheme that “calls the very integrity of the blockchain into question.”

“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 Thomas Fattorusso, a special agent with the IRS Criminal Investigation’s New York Field Office.

Source: U.S. Justice Department

The exploit was focused on manipulating the maximum extractable value (MEV) in the Ethereum blockchain. In this case, the brothers allegedly deployed a series of test transactions that ultimately allowed them to have the blockchain “prematurely release the full content of a proposed block” and steal the crypto.

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U.S. authorities said the brothers rejected requests to return the stolen funds and hid the assets using shell companies and foreign crypto exchanges, transferring them to several wallets. They could face up to 20 years in prison for each count if convicted.

Blockchain security platform CertiK reported that victims of crypto hacks, exploits and scams had lost roughly $25 million in April — its lowest monthly figure since 2021. The platform reported roughly $1 billion in crypto lost to illicit actors in 2023.

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