The four-week trial of two MIT graduates – Anton (25) and James (29) Peraire-Bueno – accused of defrauding the Ethereum network of $25 million, ended in a mistrial after the jury could not agree on how to apply the law in the case.
The brothers were indicted in the Southern District of New York federal court on charges of conspiracy to commit wire fraud, wire fraud and money laundering, for allegedly exploiting a vulnerability in the MEV-Boost software to make a profit of $25 million in just 12 seconds.
The prosecution argued that this was an organized fraud, while the defense team asserted that the brothers' actions were simply part of free competition in the MEV space – where validators and trading bots are allowed to arrange transactions to maximize profits.
Specifically, in April 2023 – seven months after Ethereum completed its transition to Proof-of-Stake – the brothers allegedly exploited a bug in MEV-Boost to “poison” a transaction block, thereby monitoring the activities of other traders. They then conducted a “sandwich” attack, pushing up the token price before other people’s transactions were executed, and then reselling it to lock in profits – earning $25 million in just 12 seconds.
Peter Van Valkenburgh, CEO of Coin Center, said their actions are different from other DeFi attacks, like Avraham Eisenberg’s manipulation of Mango Markets, because in the validator world, “the only goal is to maximize profits without violating the rules of the protocol.” He warned that if the case is convicted, it could “send chills down the spines” of those participating in open blockchain networks.
According to a report from Business Insider, the jury had no trouble understanding the facts, but they were stuck on how to apply the law in what the Justice Department called a “first-of-its-kind” case of fraud and money laundering on the blockchain. Some jurors even cried and lost sleep due to the pressure. Ultimately, Judge Jessica G. Clarke declared the trial overturned due to the inability to reach a consensus.
Van Valkenburgh said the mistrial was understandable, because “if I wasn’t a crypto person sitting on the jury, I would be extremely confused too,” he said, calling the prosecutor’s decision to prosecute “a serious abuse of discretion.”
The brothers still face three original charges after the ruling, and the future of the case depends on the decision of the Southern District of New York prosecutor, who can either dismiss the case or reopen it. Van Valkenburgh warned that if the case is retried, it would represent an effort by the US Justice Department to expand its jurisdiction over blockchain activities, even as the current administration is said to be more open to the crypto industry.
“If they continue to pursue the case,” he said, “it means they believe that whatever happens on the blockchain is within their control – and they can bend old criminal law to apply to completely new realities.”
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The article Court Announces Cancellation of “MEV Brothers” Trial for $25 Million Fraud appeared first on CoinMoi .
