According to a press release, brothers Anton Peraire-Bueno, 24, of Boston, and James Peraire-Bueno, 28, of New York, have been arrested and charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. The charges arise from an alleged scheme to exploit the Ethereum blockchain, netting the duo approximately $25 million worth of cryptocurrency in just 12 seconds.

Manipulation In The ETH Blockchain

The brothers were apprehended in their respective cities and are scheduled to appear before U.S. Magistrate Judges in Massachusetts and New York this afternoon. The indictment reveals a planned attack on the Ethereum blockchain’s core system.

According to U.S. Attorney Damian Williams for the Southern District of New York, the brothers, leveraging their advanced education in computer science and mathematics from a prestigious university, used a method to manipulate the blockchain’s transaction validation protocols. This manipulation allowed them to access and alter pending private transactions, effectively diverting substantial sums of cryptocurrency into their control.

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The scheme, planned over several months, involved studying the trading behaviors of their targets and setting up numerous precautions to conceal their identities. This included creating shell companies, using private cryptocurrency addresses, and routing the stolen funds through foreign exchanges.

The press release stated, “And once they put their plan into action, their heist only took 12 seconds to complete. This alleged scheme was novel and has never before been charged. But as the indictment makes clear, no matter how sophisticated the fraud or how new the techniques used to accomplish it, the career prosecutors of this office will be relentless in pursuing people who attack the integrity of all financial systems.”

The Accused Might Face 20 Years In Prison

Despite the speed of the heist, the Department of Justice, in collaboration with the IRS Criminal Investigation (IRS-CI) New York Field Office, quickly cracked down on the manipulation. Deputy Attorney General Lisa Monaco praised the efforts of the prosecutors and agents involved. Special Agent in Charge Thomas Fattorusso of IRS-CI highlighted the use of robust technology combined with traditional investigative techniques to trace the stolen funds.

An IRS special agent said, “In this case, IRS-CI New York’s Cyber Unit simply followed the money. Regardless of the complexity of the case, we continue to lead the effort in financial criminal investigations with cutting-edge technology and good-ole-fashioned investigative work, on and off the blockchain.” 

The brothers allegedly took significant steps to hide their activities, searching online for ways to carry out their plan, hide their involvement, and launder their illegal profits. This included looking into cryptocurrency exchanges with minimal “know your customer” procedures and seeking legal advice on cryptocurrency crimes and extradition. Despite their advanced tactics, they were ultimately unable to avoid the authorities.

If found guilty, Anton and James Peraire-Bueno could each face up to 20 years in prison for each charge.

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