A New York jury failed to succeed in a verdict within the case of Anton and James Peraire-Bueno, the MIT-educated brothers accused of fraud and money laundering in reference to a 2023 Ethereum blockchain exploit that resulted within the removal of $25 million in digital assets.
In a ruling Friday, U.S. District Judge Jessica Clarke declared the case a mistrial after jurors couldn’t agree on whether to convict or acquit the brothers, Inner City Press reported.
The decision got here after a three-week trial in federal court in Manhattan that resulted in differing theories from prosecutors and defense regarding the Peraire-Buenos' alleged actions related to maximum extractable value (MEV) bots.
A MEV attack occurs when traders or validators exploit the order of transactions on a blockchain to make profits. With automated MEV bots, they push other trades to the highest or corner them by paying higher fees for priority.
In the case of the brothers, they allegedly used MEV bots to “trick” users into trading. Although the 2 had been planning for months, the exploit reportedly only took 12 seconds to net the couple $25 million.
In their closing arguments to the jury this week, prosecutors argued that the brothers “tricked” and “defrauded” users by engaging in a “bait and swap” scheme, thereby obtaining about $25 million in cryptocurrencies. They cited evidence suggesting that the 2 had been planning their moves for months and studying possible consequences of their actions.
“Ladies and gentlemen, bait and switch will not be a trading strategy,” prosecutors said Tuesday, in line with Inner City Press. “It's a scam. It's a scam. It's manipulating the system. You posed as a legitimate MEV Boost validator.”
In contrast, Peraire-Buenos' defense attorneys opposed the U.S. government's theory that the 2 posed as “honest auditors” to extort the funds, although the court ultimately allowed the argument to be presented to the jury.
“This is like stealing a base in baseball,” the defense team said Tuesday. “If there isn’t any fraud, there isn’t any conspiracy, there isn’t any money laundering.”
What is at stake for the crypto industry after the ruling?
Although the case ended with out a verdict, the mistrial has left the crypto industry divided, with many observers debating the legal and technical implications of treating MEV-related activities as a possible criminal offense. Coin Center, a cryptocurrency advocacy organization, filed an amicus temporary on Monday amid opposition from prosecutors.
“I don’t consider that what’s within the indictment is wire fraud,” said Carl Volz, a partner on the Gunnercooke law firm, in an editorial for DLNews on Monday. “A jury could come to a special conclusion, but in the event that they do, it’s going to be since the brothers googled stupidly and talked an excessive amount of, for too long, to the mistaken people.”
This is a developing story and more information shall be added because it becomes available.
