Opening arguments began in a criminal trial involving two brothers who are facing charges for a multimillion-dollar exploit utilizing maximal extractable value (MEV) bots on the Ethereum blockchain. Anton and James Peraire-Bueno were present in a New York courtroom as the prosecution and defense provided contrasting accounts regarding the alleged crypto scheme that purportedly saw $25 million unlawfully taken.
The US government, through its attorneys, asserted that the defendants manipulated their victims, executing a “high-speed bait and switch.” In contrast, the defense countered, claiming that the true victims were the algorithms known as sandwich bots; they suggested that the brothers had merely employed a trading strategy and emphasized that no illegal profits were made, thereby negating any possible money laundering.
“Yes, they off-ramped the crypto,” argued the brothers’ defense attorney, Katherine Trefz. “They brought it into the US and paid tax on it: $6 million, prior to their arrests at home. This case is complex.”
The alleged exploit, which took place in April 2023, was preceded by several months of meticulous planning, including research on accounts using MEV bots and an evaluation of potential penalties for misconduct.
US authorities took the brothers into custody in May 2024, and they are now contending with serious charges including conspiracy to commit wire fraud, money laundering, and conspiracy to receive stolen property. If found guilty, they could each face sentences of up to 20 years per count.
Experts in the industry are closely watching the proceedings for any implications on the Ethereum network.
Evan Van Ness, chief investment officer at TXPool Capital, commented after the brothers’ arrest, saying, “I’m open to changing my mind but it seems like a pretty gray area to me. Many MEV operators adopt the mantra that all is fair in love and MEV, and here, the brothers literally sandwiched some sandwich attackers?”
Dankrad Feist, a researcher at the Ethereum Foundation, expressed agreement, stating, “The charges make sense; they exploited a bug in a system for their own benefit. The fact that it’s a permissionless system doesn’t imply a lack of rules. Code is not law.”
At the time of this publication, the trial was still underway in the US District Court for the Southern District of New York, and both brothers have been out on bail since May 2024.
