Overview
Brothers Anton and James Peraire-Bueno are scheduled to stand trial this year, accused of executing a $25 million "Maximal Extractable Value" (MEV) exploit on the Ethereum blockchain that prosecutors allege amounted to wire fraud and wire fraud conspiracy. The indictment in United States v. Anton Peraire-Bueno and James Peraire-Bueno, No. 1:24-cr-00293-GJLC (SDNY), alleges the brothers manipulated transaction ordering in April 2023, using their technical knowledge of Ethereum’s infrastructure to gain an unlawful advantage.
This case has sweeping implications on what it means to commit a fraud on the crypto markets. Prosecutors' case hinges on the brothers secretly inserting and reordering transactions within a block, then siphoning millions from unsuspecting traders. According to defendants, the actions prosecutors allege were criminal are, in the crypto industry, generally regarded as falling within the accepted bounds of trading practices. In bringing this case, the DOJ is signaling a bright-line distinction between permissible blockchain activity and criminal conduct, alleging that the brothers engaged in fraud by misleading validators and other participants in the Ethereum network.
This case is believed to be the first federal criminal trial involving a MEV exploit, with prosecutors seeking to apply traditional criminal statutes to emerging blockchain-based financial practices despite the lack of consistent regulatory frameworks, and in a space built on unconventional rules of engagement. Defense filings, including a joint motion to dismiss, argue that Ethereum's own rules allow for MEV and that the brothers' conduct was lawful within the blockchain framework. Pretrial motions are currently underway, and this case is measuring up to be a test of how US courts will treat highly technical trading strategies in the crypto space.
