MEV bot exploit from MIT-educated brothers leads to $25m crypto fraud trial

A judge denies two brothers’ plea to dismiss crypto fraud charges after allegedly stealing $25 million from the Ethereum blockchain using an MEV bot. Why was their bid dismissed?

According to a U.S. court document, District Judge Jessica Clarke has denied a motion to dismiss fraud charges aimed at Anton and James Peraire-Bueno, two MIT-educated brothers who profited $25 million by exploiting a vulnerability on the Ethereum (ETH) network to steal cryptocurrency from victims.

Aside from arguing that the wire fraud statute did not clarify whether their actions were “permitted by the system’s code,” they also claimed that they were unfairly targeted by the victim trading bots in manipulative trading.

“Defendants’ motions to dismiss are each DENIED, except with respect to the receiving stolen property charge,” wrote the Judge in the document.

The reason why their bid was denied stems from “failure to provide fair notice, failure to allege essential elements, and failure to state the essential facts,” according to the judge.

Earlier in the case proceedings, the brothers were first charged with wire fraud, conspiracy to receive stolen property, conspiracy to commit wire fraud and conspiracy to commit money laundering.

However, the Judge dropped the charge regarding conspiracy to receive stolen property after the brothers cited a Department of Justice memo about avoiding regulatory overreach on digital assets.

Now that the motion to dismiss charges have been denied, the brothers are on track to stand trial in October 2025. The court order was first issued by Judge Clarke in August 2024.

How did the brothers use MEV bots to steal $25 million?

In April 2023, Anton and James Peraire-Bueno allegedly used their computer science knowledge to manipulate Maximal Extractable Value or MEV bots to net up to $25 million in on-chain funds within just 12 seconds. They established a company called Pine Needle Inc. as a cover up to carry out the plan.

According to the document, the brothers created a detailed plan that consisted of four steps: bait, block, search and propagation. They targeted 16 Ethereum validators using 529.5 ETH (equal to around $880,000) to execute the scheme using “lure transactions” to attract the bots.

“As expected, the Victim Traders’ MEV Bots proposed eight bundles that included the Lure Transactions and were submitted to the Builder. For each of these eight bundles, the Victim Traders bought coded front-run trades,” wrote the Judge.

The stolen funds were then laundered through a bank deposit and scattered across eight different cryptocurrency addresses. The brothers used an exchange that did not require Know-Your-Customer verification.