MIT Brothers Arrested in $25M Ethereum Blockchain Fraud
In an unprecedented move, two brothers who majored in mathematics and computer science at the prestigious Massachusetts Institute of Technology have been arrested and charged with embezzling and defrauding $25 million. cryptocurrency using vulnerabilities in the Ethereum blockchain.
TLDR
Brothers Anton Perrier-Bueno, 24, and James Pepper-Bueno, 28, were charged with wire fraud, wire fraud and money laundering for the theft of $25 million in cryptocurrency. The brothers, who studied mathematics and computer science at MIT, are said to have used Ethereum's blockchain protocols to spoof and detect pending transactions. In what authorities are calling the “first-of-its-kind Ethereum blockchain fraud,” they are accused of manipulating the electronic currency's activity and stealing the funds in roughly 12 seconds. The brothers are said to have refused demands to return the looted funds and have been moving the assets into multiple wallets in an attempt to hide them using shell companies and foreign crypto exchanges. If convicted, the brothers could face up to 20 years in prison on each count.
Anton Perre-Bueno, 24, of Boston, and James Pepper-Bueno, 28, of New York, were charged with participating in a sophisticated scheme to manipulate the Ethereum blockchain protocols to discover and alter pending transactions. Electronic currency.
The United States Department of Justice (DOJ) said the brothers used their special skills and education to pull off the heist, which took just 12 seconds to complete.
According to the unsealed indictment, the Perrier-Buno brothers spent months planning the heist, using their expertise in crypto trading and their understanding of the inner workings of the Ethereum blockchain.
The alleged scheme exploited a vulnerability in the process to set up blocks, allowing the brothers to manipulate the block for their own benefit before adding it to the blockchain.
The brothers established a series of Ethereum validators through shell companies and foreign currencies, hiding their identities and masking their efforts to control blocks and own Ethereum. They have deployed “bait transactions” designed to attract the attention of special bots used by buyers and sellers to find profitable opportunities in the Ethereum network. When the bots hijacked the bait, the fraternity's authenticators exploited the vulnerability to reverse engineer the transaction and inject the encryption into their own.
The alleged theft victims tried to ask for their money back, but the DOJ said the brothers rejected those requests and took steps to cover up what they found.
The Perrier-Bueno brothers allegedly set up shell companies and used multiple private crypto addresses and foreign currencies to hide their detailed “Know Your Customer” (KYC) activities.
The brothers' online search history reveals that they researched the crimes they were ultimately accused of, as well as methods to avoid prosecution and possible legal consequences.
Searches included phrases such as “how to launder crypto”, “no KYC exchanges”, “top crypto lawyers”, “money laundering statute of limitations” and extradition from certain foreign countries.
US Attorney Damian Williams described the seriousness of the brothers' actions.
“Question the Blockchain's Integrity.”
Regardless of the fraudster's sophistication or the novelty of the techniques used, prosecutors will not hesitate to pursue those who attack the integrity of financial systems, he added.
The arrests come as the US Securities and Exchange Commission (SEC) is considering approving an Ethereum exchange-traded fund (ETF). Some experts believe that this fraud could raise the SEC's suspicions and influence their decisions.
The Perrier-Bueno brothers face a maximum sentence of 20 years in prison for each charge if convicted.
