A U.S. judge has denied two MIT-educated brothers’ attempt to dismiss a $25 million crypto fraud case, ruling that their use of novel exploit methods on the Ethereum blockchain still constitutes wire fraud under federal law.
In a ruling on Wednesday, U.S. District Judge Jessica Clarke rejected a motion to dismiss filed by Anton and James Peraire-Bueno, stating that the government had sufficiently alleged the brothers’ conduct met the criteria for fraud.
“Taking the government’s allegations as true, which the court must do at this stage, the wire fraud statute provided defendants with adequate notice that their alleged conduct was criminal, despite any novel means used by defendants,” Clarke wrote in the court’s memorandum opinion.
The Department of Justice originally charged the brothers in May 2024, alleging they exploited a vulnerability in the Ethereum network to steal $25 million worth of crypto assets in just 12 seconds. The attack was a first-of-its-kind, involving manipulation of MEV (Maximal Extractable Value) bots.
MEV bot exploitation: bait, block, search, propagate
MEV bots are designed to scan Ethereum’s mempool for pending transactions to extract arbitrage opportunities, typically by front-running or reordering trades to maximize profits.
According to the indictment, the brothers developed a four-phase plan — “bait, block, search, and propagation” — and deployed 16 Ethereum validators using 529.5 ETH to execute the scheme. By luring bots into lucrative-looking trades and then disrupting the validator process, they were able to reroute the value to their own wallets.
The Peraire-Bueno brothers contended that their actions were legal since they were “permitted by the system’s code,” and accused prosecutors of unfairly targeting them while ignoring the manipulative practices of the MEV bots themselves.
One count — conspiracy to receive stolen property — was dropped after the defense cited a DOJ memo warning against regulatory overreach on crypto-related offenses.In an August 2024 hearing, the court scheduled the brothers’ trial for October 2025, though the exact date has not been finalized. The case remains in the pre-trial motions phase.If convicted, the brothers face multiple counts of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering — all of which carry substantial prison time and fines under federal sentencing guidelines.Meanwhile, Ethereum’s validator activity remains turbulent. The validator exit queue recently hit an 18-month high, and part of that pressure may stem from DeFi disruptions, notably Justin Sun’s $600 million ETH withdrawal from Aave.
That withdrawal caused Lido’s stETH to briefly lose its peg to ETH — meaning its market price dropped below the 1:1 ratio it’s meant to maintain — which led to a sharp reduction in liquidity.