The criminal trial opening statements for two brothers accused of exploiting a multi-million dollar vulnerability using Maximum Extractable Value (MEV) bots began on Wednesday.
Anton and James Peraire-Bueno appeared in a New York court, where U.S. prosecutors and defense attorneys presented differing narratives regarding the alleged cryptocurrency scheme that resulted in approximately $25 million being transferred.
According to Inner City Press, U.S. government lawyers claimed the brothers "deceived victims" by implementing "high-speed sandwich trades." However, the defense attorney argued that "the victims here are the sandwich bots," adding that the Peraire-Bueno brothers employed a trading strategy that claimed profits were not illegal, thus there was no associated money laundering.
"Yes, they withdrew cryptocurrency," defense attorney Katherine Trefz said in her opening statement. "They brought it into the U.S. and paid taxes: $6 million. Before they were arrested at home. This is a complex case."
The alleged exploit on the Ethereum blockchain in April 2023 was prepared over several months, targeting accounts using MEV bots, researching potential penalties for misconduct, and analyzing code implementation. U.S. authorities arrested the brothers in May 2024.
The brothers each face charges related to conspiracy to commit wire fraud, money laundering, and conspiracy to receive stolen property, with a judge potentially sentencing them to a maximum of 20 years in prison for each count if convicted.
Many industry experts are watching the trial for its potential impact on the Ethereum network.
"I’m willing to change my mind, but it seems to me this is a pretty gray area," said Evan Van Ness, Chief Investment Officer of cryptocurrency firm TXPool Capital, shortly after the brothers' arrest in May 2024. "Many MEV operators adopt the creed that 'all is fair in love and MEV.' And did the brothers actually sandwich attack some sandwich attackers?"
"I think the charges are valid," responded Dankrad Feist, a researcher at the Ethereum Foundation, to Van Ness. "They exploited loopholes in the system for their own profit. Just because this is a permissionless system doesn’t mean there are no rules now. Code is not law."
As of the time of publication, the trial is still ongoing in the Southern District of New York Federal Court. The brothers have been out on bail since May 2024.
Related: Opinion: The Maturity of Cryptocurrency Requires Systematic Discipline, Not Speculation
Original: “MEV Bot Exploit Trial Begins, Could Redefine Cryptocurrency Legal Boundaries”
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