Anton Peraire-Bueno and James Pepaire-Bueno carefully orchestrated the Exploit over several months. They studied the trading behaviors of the victim traders whose cryptocurrency they planned to steal.
Today, an indictment was revealed charging Anton Peraire-Bueno, 24, from Boston, and James Pepaire-Bueno, 28, from New York, with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. The charges stem from an alleged scheme by the defendants to manipulate the Ethereum blockchain's integrity to illicitly acquire about $25 million worth of cryptocurrency in roughly 12 seconds. Anton Peraire-Bueno and James Peraire-Bueno were arrested yesterday in Boston and New York, respectively, and will appear this afternoon before U.S. Magistrate Judge Paul G. Levenson in the District of Massachusetts and U.S. Magistrate Judge Valerie Figueredo in the Southern District of New York.
“As alleged in today’s indictment, the Peraire-Bueno brothers stole $25 million in Ethereum cryptocurrency through a technologically sophisticated, cutting-edge scheme they plotted for months and executed in seconds,” said Deputy Attorney General Lisa Monaco.
“Unfortunately for the defendants, their alleged crimes were no match for Department of Justice prosecutors and IRS agents, who unraveled this first-of-its kind wire fraud and money laundering scheme. As cryptocurrency markets continue to evolve, the Department will continue to root out fraud, support victims, and restore confidence to these markets.”
“Today, my office indicted two brothers — Anton Peraire-Bueno and James Peraire-Bueno — for conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, all stemming from their alleged scheme to exploit the Ethereum blockchain and to obtain about $25 million worth of cryptocurrency from it,” said U.S. Attorney Damian Williams for the Southern District of New York.
“As we allege, the defendants’ scheme 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. And once they put their plan into action, their heist only took 12 seconds to complete. This alleged scheme was novel and has never before been charged. But as the indictment makes clear, no matter how sophisticated the fraud or how new the techniques used to accomplish it, the career prosecutors of this office will be relentless in pursuing people who attack the integrity of all financial systems.”
“These brothers allegedly committed a first-of-its-kind manipulation of the Ethereum blockchain by fraudulently gaining access to pending transactions, altering the movement of the electronic currency, and ultimately stealing $25 million in cryptocurrency from their victims,” said Special Agent in Charge Thomas Fattorusso of the IRS Criminal Investigation (IRS-CI) New York Field Office. “In this case, IRS-CI New York’s Cyber Unit simply followed the money. Regardless of the complexity of the case, we continue to lead the effort in financial criminal investigations with cutting-edge technology and good-ole-fashioned investigative work, on and off the blockchain.”
According to the Justice Department's press release, the indictment alleges that Anton Peraire-Bueno and James Pepaire-Bueno, who are brothers, studied mathematics and computer science at a top university. Utilizing the specialized skills they developed during their education and their expertise in cryptocurrency trading, Anton and James Peraire-Bueno exploited the Ethereum blockchain's integrity to fraudulently acquire about $25 million worth of cryptocurrency from victim traders (the "Exploit").
This exploit, believed to be the first of its kind, involved manipulating and tampering with the process and protocols for validating and adding transactions to the Ethereum blockchain. They gained unauthorized access to pending private transactions, altered certain transactions, and stole cryptocurrency from their victims. After the theft, they refused to return the stolen cryptocurrency and took numerous steps to conceal their illicit gains.
Anton Peraire-Bueno and James Pepaire-Bueno carefully orchestrated the Exploit over several months. They studied the trading behaviors of the victim traders whose cryptocurrency they planned to steal. To conceal their identities and the stolen proceeds, they established shell companies and used multiple private cryptocurrency addresses and foreign exchanges. Following the Exploit, the defendants transferred the stolen cryptocurrency through a series of transactions to hide the source and ownership of the funds.
During the planning, execution, and aftermath of the Exploit, Anton Peraire-Bueno and James Pepaire-Bueno searched online for various information, including how to execute the Exploit, methods to conceal their involvement, cryptocurrency exchanges with limited "know your customer" procedures for laundering their proceeds, attorneys with cryptocurrency expertise, extradition procedures, and details about the crimes charged in the indictment.
If convicted, Anton and James Peraire-Bueno each face up to 20 years in prison for each count.
The case was investigated by the IRS-CI New York’s Cyber Investigations Unit, with assistance from U.S. Customs and Border Protection and the New York City Police Department. Assistant U.S. Attorneys Rushmi Bhaskaran and Danielle Kudla from the Southern District of New York are prosecuting the case.
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