A New York jury was unable to reach a verdict in the case of Anton and James Peraire-Bueno, the MIT-educated brothers accused of fraud and money laundering related to a 2023 exploit of the Ethereum blockchain that resulted in the removal of $25 million in digital assets.
In a Friday ruling, US District Judge Jessica Clarke declared a mistrial in the case after jurors failed to agree on whether to convict or acquit the brothers, Inner City Press reported.
The decision came after a three-week trial in Manhattan federal court, resulting in differing theories from prosecutors and the defense regarding the Peraire-Buenos’ alleged actions involving maximal extractable value (MEV) bots.
A MEV attack occurs when traders or validators exploit transaction ordering on a blockchain for profit. Using automated MEV bots, they front-run or sandwich other trades by paying higher fees for priority.
In the brothers’ case, they allegedly used MEV bots to “trick” users into trades. The exploit, though planned by the two for months, reportedly took just 12 seconds to net the pair $25 million.
In closing arguments to the jury this week, prosecutors argued that the brothers “tricked” and “defrauded” users by engaging in a “bait and switch” scheme, allowing them to extract about $25 million in crypto. They cited evidence suggesting that the two plotted their moves for months and researched potential consequences of their actions.
“Ladies and gentlemen, bait and switch is not a trading strategy,” said prosecutors on Tuesday, according to Inner City Press. “It is fraud. It is cheating. It is rigging the system. They pretended to be a legitimate MEV-Boost validator.”
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In contrast, defense lawyers for the Peraire-Buenos pushed back against the US government’s theory of the two pretending to be “honest validators” to extract the funds, though the court ultimately allowed the argument to be presented to the jury.
“This is like stealing a base in baseball,” said the defense team on Tuesday. “If there’s no fraud, there’s no conspiracy, there’s no money laundering.”
What’s at stake for the crypto industry following the verdict?
Though the case ended without a verdict, the mistrial has left the crypto industry divided, with many observers debating the legal and technical implications of treating MEV-related activity as a potential criminal offense. Crypto advocacy organization Coin Center filed an amicus brief on Monday after opposition from prosecutors.
“I don’t think what’s in the indictment constitutes wire fraud,” said Carl Volz, a partner at law firm Gunnercooke, in a Monday op-ed for DLNews. “A jury could conclude differently, but if it does, it’ll be because the brothers googled stupidly and talked too much, for too long, with the wrong people.”
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This is a developing story, and further information will be added as it becomes available.