MIT-trained brothers accused of stealing $25 million in crypto in just 12 seconds: ‘There is no government regulation’

A 12-second cryptocurrency transaction is at the center of a major federal lawsuit. As reported Former Massachusetts Institute of Technology students James and Anton Peraire-Bueno are accused of using their advanced coding and math skills to steal $25 million in Ethereum “ether” currency through what prosecutors call a “one-of-a-kind” fraud scheme, according to Business Insider.

The alleged heist took place in April 2023 and prosecutors say it was “meticulously planned” over at least three months. The trial began Oct. 14 in Manhattan federal court, where a jury will decide whether the brothers committed fraud or simply foiled the “bots,” as the defense claims.

Federal prosecutors allege the brothers exploited a software vulnerability in the Ethereum blockchain to intercept pending private transactions and falsified the transactions during the 12 seconds. During this brief window, prosecutors said the brothers replaced legitimate transactions with unwanted cryptocurrencies, rendering the entire transaction worthless.

They add that they masked their identities and moved the crypto assets through a “network of shell companies, crypto addresses, and foreign crypto exchanges,” as BI reports. If convicted of conspiracy, wire fraud and money laundering, each brother could face up to 20 years in prison per count.

On the other hand, their defense attorneys claim there was no fraud or intent to defraud. “There is no central authority. … And there is no government regulation. Instead, economic incentives guide party behavior,” Patrick Looby, who represents James Peraire-Bueno, said per BI.

The defense argues that the brothers simply took advantage of “predatory trading bots” using economic incentives. They said the alleged victims made risky bets that didn’t work out for them. “But nothing was stolen and there was no theft, as that word would normally be used,” Looby said.

Crypto oversight has been a point of contention for years, and a report from the United Nations Office on Drugs and Crime find This year, cryptocurrency exchanges have become an integral part of organized crime.

Besides financial injustice, environmental injustice has also been criticized. Electricity demand in the United States has grew up quickly crypto mining, and it was find that miners around the world used as much electricity as all of Australia in 2023, according to the US Energy Information Administration, although it is worth noting that the Ethereum platform moved to a proof-of-stake validation system in 2022 which reduced its energy demand by around 99.5%.

The major impact of crypto due to its reliance on dirty energy is leading to environmental consequences, including an increase in extreme weather events. The 12-second transactions use about as much energy as is needed for six homes per day, according to an Energy Star report.

The brothers’ lawsuit could set a precedent for how the U.S. government interprets fairness and fraud in decentralized digital spaces. The trial is expected to continue until early November.

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