MIT Students Stole $25M In Seconds By Exploiting ETH Blockchain Bug, DoJ Says

Arthur T Knackerbracket has processed the following story:

Within approximately 12 seconds, two highly educated brothers allegedly stole $25 million by tampering with the ethereum blockchain in a never-before-seen cryptocurrency scheme, according to an indictment that the US Department of Justice unsealed Wednesday.

In a DOJ press release, US Attorney Damian Williams said the scheme was so sophisticated that it "calls the very integrity of the blockchain into question."

"The brothers, who studied computer science and math at one of the most prestigious universities in the world, allegedly used their specialized skills and education to tamper with and manipulate the protocols relied upon by millions of ethereum users across the globe," Williams said. "And once they put their plan into action, their heist only took 12 seconds to complete."

Anton, 24, and James Peraire-Bueno, 28, were arrested Tuesday, charged with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. Each brother faces "a maximum penalty of 20 years in prison for each count," the DOJ said.

The alleged scheme was launched in December 2022 by the brothers, who studied at MIT, after months of planning, the indictment said. The pair seemingly relied on their "specialized skills" and expertise in crypto trading to fraudulently gain access to "pending private transactions" on the blockchain, then "used that access to alter certain transactions and obtain their victims' cryptocurrency," the DOJ said.

The indictment goes into detail explaining that the scheme allegedly worked by exploiting the ethereum blockchain in the moments after a transaction was conducted but before the transaction was added to the blockchain.

These pending transactions, the DOJ explained, must be structured into a proposed block and then validated by a validator before it can be added to the blockchain, which acts as a decentralized ledger keeping track of crypto holdings. It appeared that the brothers tampered with this process by "establishing a series of ethereum validators" through shell companies and foreign exchanges that concealed their identities and masked their efforts to manipulate the blocks and seize ethereum.

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