- Anton and James Peraire-Bueno have lost their bid to dismiss fraud charges related to a $25 million Ethereum exploit.
- The brothers’ lawyer had argued the wire fraud charges were unconstitutional.
- While the judge did not reject the argument, she said it must take place in a full trial.
Two brothers who were charged with fraud after exploiting an Ethereum vulnerability to the tune of $25 million have had their attempt to dismiss the charges kicked out.
Anton and James Peraire-Bueno, who were enrolled at the Massachusetts Institute of Technology (MIT), had argued that the wire fraud statute was too vague to apply, claiming they lacked fair notice that their actions were illegal.
Legal Questions Surround Ethereum MEV Hack
The nature of the Peraire-Bueno’s exploit is unlike a typical cyber attack and has no precedent in fraud law.
They did not breach any servers or steal passwords. Neither did they mislead victims in the classic sense. Instead, they targeted so-called MEV (Maximum Extractable Value) bots.
In a statement following their arrest, U.S. Attorney Damian Williams said the attack, “calls the very integrity of the blockchain into question.”
However, in their defense, the brothers claimed that the federal wire fraud statute was unconstitutionally vague when applied to their actions. Their lawyers argued the statute fails to provide clear notice that manipulating a blockchain ordering mechanism was criminal.
$25 Million in 12 Seconds
Prosecutors allege the exploit occurred in a flash, lasting just 12 seconds, and netted the brothers approximately $25 million in cryptocurrency.
The victims were independent MEV bot operators who deploy algorithms to front-run or arbitrage Ethereum transactions.
Using an Ethereum validator they controlled, the brothers lured MEV bots into posting illiquid token trades. They then swapped the bait transactions with tampered ones, blocking the final purchase while keeping the tokens the bots originally spent.
Trial To Go Ahead
Despite the novelty of the case, Judge Jessica G. Clarke ofthe Southern District of New York rejected the brothers’ motion to dismiss.
The court ruled that the government’s theory of wire fraud did not violate due process. The case is now set to proceed to trial on October 14, 2025, where Anton and James Peraire-Bueno will face charges including conspiracy to commit wire fraud, wire fraud, and money laundering.
The ruling was issued without prejudice, however, allowing their defense to revisit the constitutional argument later in the proceedings.
