- Two brothers, Anton and James Pepaire-Bueno, were arrested and charged with allegedly using a maximal extractable value (MEV) exploit to steal $25 million worth of cryptocurrency from the Ethereum blockchain in just 12 seconds.
- The brothers were accused of gaining access to pending transactions on Ethereum’s network, altering the movement of the cryptocurrency, and stealing funds from victims through a complex scheme involving bots and shell companies.
- The Department of Justice claimed the brothers’ actions called into question the integrity of the Ethereum blockchain and represented a first-of-its-kind manipulation of the network.
The United States Department of Justice announced Wednesday that it has arrested Anton and James Pepaire-Bueno and charged them with actions the government said allowed them to swipe $25 million worth of cryptocurrency via the Ethereum blockchain in just 12 seconds.
Background on MEV Exploits
MEV is a term in the crypto sphere used to refer to the amount of value that can be extracted from a block production. Blocks make up a blockchain and contain data on transactions.
The DOJ alleged that via the complex scheme, the brothers were able to use bots to identify arbitrage opportunities, preview transactions before they were processed on the network, and essentially copy and make false transactions so they could pocket funds. The brothers allegedly targeted traders using MEV bots, exploiting a vulnerability in the MEV-Boost relay code to get a jump on incoming transactions.
Though they allegedly planned the attack for months, the actual heist took just 12 seconds, the DOJ claimed. Authorities added that the two brothers had experience trading cryptocurrencies and allegedly set up shell companies and used multiple private crypto addresses and foreign cryptocurrency exchanges to cover their tracks.
Details on the Alleged Theft
The DOJ alleged that the two brothers—educated at one of the most prestigious universities in the world in math and computer science—were able to get access to pending transactions on Ethereum’s network and steal funds.
“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 Special Agent in Charge Thomas Fattorusso of the IRS Criminal Investigation (IRS-CI) New York Field Office, in a statement.
US Attorney Damian Williams for the Southern District of New York added: “As we allege, the defendants’ scheme calls the very integrity of the blockchain into question.”
Impact on Ethereum
Ethereum is the blockchain behind the second biggest cryptocurrency by market cap, ETH. The network is used for everything from sending funds and minting and trading NFTs to building lending and borrowing apps.
The DOJ charged that the two brother’s alleged scheme undermines trust in the Ethereum blockchain.
“Though they allegedly planned the attack for months, the actual heist took just 12 seconds,” the DOJ claimed.
Conclusion
The two brothers from Boston and New York have been charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. Authorities allege they stole $25 million worth of cryptocurrency from Ethereum users via an MEV exploit.
