DOJ Charges Brothers in $25M MEV Exploit

Two brothers, Anton Pepaire-Bueno and James Pepaire-Bueno, were arrested for allegedly stealing $25 million in crypto through a sophisticated arbitrage bot exploit on Ethereum.

What’s the scoop?

• The U.S. Department of Justice (DOJ) alleges Anton and James manipulated MEV-boost, a software used by Ethereum validators, to steal $25M. 
• Today, a federal court unsealed indictments charging the brothers with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering.
• They allegedly targeted maximal extractable value (MEV) bots in a sophisticated 12-second transaction tampering attack that drained $25M in stablecoins and other tokens from a series of liquidity pools. 

Bankless take:

This case is unprecedented in the U.S., as it’s the first time a federal court has handled an incident involving MEV manipulation on Ethereum. Most people in crypto don’t even understand MEV, so it will be key to watch how the U.S. government navigates this complex frontier topic and if similar cases will be forthcoming.

Also, this case has notably sparked debate in the crypto community, with some finding it hypocritical that MEV traders can legally launch front-running sandwich attacks while the DOJ has seemingly charged the Peraire-Bueno brothers for front-running sandwich attackers.

The distinction lies in the fact that regular MEV users operate within the confines of publicly available information and are bound by various rules. In contrast, the Peraire-Bueno brothers exploited a previously unknown vulnerability in MEV-boost, surpassing these rules and enforcing massive losses rather than less-than-satisfactory trades on other traders.