Original Title: MIT Grad Brothers' Trial Puts Focus on 'Wild West of Crypto'
Original Author: Miles J. Herszenhorn, Bloomberg
Original Translation: Luffy, Foresight News
Two brothers who recently graduated from the Massachusetts Institute of Technology are facing trial this week. The case may unveil a secretive and controversial cryptocurrency trading strategy.
James Peraire-Bueno and Anton Peraire-Bueno are accused of stealing approximately $25 million from other traders on the Ethereum blockchain through a so-called "sandwich attack." The brothers deny the charges, arguing that their actions were reasonable operations within an unregulated market, and that the so-called victims were also engaging in similar trades.
Anton Peraire-Bueno (left) and James Peraire-Bueno (right) arrive at the federal court in New York on Tuesday
The case has sparked division within the cryptocurrency community. Many are hopeful that the trial, which begins on Wednesday in Manhattan federal court, will clarify the rules surrounding the "Maximal Extractable Value (MEV) strategy." MEV strategies refer to the practice of reordering, excluding, or including transactions before they are recorded on the blockchain.
"To be honest, I never thought this would constitute a crime," said Evan Van Ness, Chief Investment Officer of cryptocurrency trading firm TXPool Capital, when discussing the case against the brothers. "If people think the cryptocurrency space is the Wild West, then MEV is the Wild West of the crypto world."
While some MEV operations are considered to enhance the efficiency of the cryptocurrency market, the sandwich attacks alleged against the Peraire-Bueno brothers are quite controversial. Attackers use bots to place orders before and after other users' trades: first driving up the price, then immediately selling for profit, with the cost borne by the users caught in the middle. Some view this behavior as market manipulation, but it is not currently illegal.
Companies that implement sandwich attacks typically operate covertly and often go to great lengths to conceal their identities. However, during the trial of the Peraire-Bueno brothers, one such company is expected to come to light. Court documents reveal that the primary alleged victim of the brothers is Savannah Technologies—a little-known Israeli firm. The company's CEO, David Yakira, is expected to testify as a prosecution witness, confirming that the brothers launched attacks against Savannah's MEV bots, resulting in a loss of $13 million for the company.
The Peraire-Bueno brothers' lawyer declined to comment; Yakira and Savannah Technologies' lawyers also refused to respond; prosecutors did not reply to requests for comment.
Prosecutors claim that 29-year-old James and 25-year-old Anton first studied the trading behavior of sandwich attackers before devising a trap. The implementers of sandwich attacks program bots to sift through pending transactions on the blockchain to identify profitable targets—typically large trades or trades involving low liquidity tokens.
The prosecution alleges that the brothers executed this plan in April 2023: they initiated multiple small low-liquidity trades to attract the attacking bots. An expert hired by the defense noted in court documents that one bot invested nearly $5 million to sandwich a trade of less than $700 made by the Peraire-Bueno brothers.
Prosecutors also pointed out that the brothers discovered a vulnerability in the MEV Boost code. MEV Boost is open-source software primarily used by Ethereum network operators. The prosecution claims that by exploiting this vulnerability, the Peraire-Bueno brothers were able to view the complete contents of the blocks intended for on-chain inclusion and reorder them for personal gain—essentially selling the low liquidity cryptocurrencies immediately after the sandwich attack bots had purchased them.
"The brothers essentially tricked the bots into executing a sandwich attack that should have been safe according to network rules," said Matt Cutler, CEO of blockchain infrastructure company Blocknative Corp. "But because of this vulnerability, the attack was not safe."
The defense, however, argues that the companies implementing sandwich attacks voluntarily completed the trades, and ownership of the funds had transferred.
Defeating Bots: Techniques Backed by Prestigious School
Prosecutors claim that the brothers learned the technical skills necessary to carry out the alleged fraud at "one of the most prestigious universities in America." Anton graduated from MIT in 2024 with a bachelor's degree in computer science and engineering; a few years earlier, James obtained both a bachelor's and master's degree in aerospace engineering from the same institution. An MIT spokesperson declined to comment on the case.
Prosecutors are attempting to characterize the case as a simple theft, guiding the jury to focus on the brothers' actions. To prove the brothers had criminal intent, the prosecution plans to point out that Anton had searched online for "which is worse, prison or jail" and "where do criminals usually hide money." The most serious fraud charges the brothers face carry a maximum sentence of 20 years in prison.
Before the trial, the prosecution expressed a desire to minimize references to sandwich trading. They requested U.S. District Judge Jessica Clarke to prohibit the brothers from submitting expert testimony regarding sandwich trading, claiming that "regardless, their actions constitute fraud," and that "excessive discussion of sandwich attacks could bias the jury against the prosecution's victims."
Clarke ruled last week that the Peraire-Bueno brothers could have most experts testify, provided they do not blame the victims.
This may be a delicate line, as the brothers hope to frame their actions within what their lawyer describes as a "high-risk adversarial behavior" context. In a recent court document, they refuted the prosecution's claims of unlawful intent:
"A person attempting to thwart a sandwich attack and defeat MEV bots using the attackers' methods has reason to believe they have done nothing wrong," the Peraire-Bueno brothers wrote in the document.
A Highly Secretive World
Within the cryptocurrency community, some who believe the charges against the Peraire-Bueno brothers are reasonable also acknowledge doubts about sandwich attacks.
"Even if you think MEV searchers (i.e., sandwich attackers) are bad actors, that doesn't mean it's reasonable to steal their money," wrote Ethereum Foundation researcher Dankrad Feist on the X platform in May 2024. "Stealing from a thief is still theft."
Feist stated on Tuesday that his view of the case has not changed since his post.
A report cited by both the prosecution and defense shows that 75% of sandwich attacks can be traced back to just 20 accounts, but little is known about the information regarding these accounts.
Savannah Technologies and Yakira also have low public visibility. According to Yakira's LinkedIn profile, he graduated from the Hebrew University of Jerusalem in 2015 and later pursued a Ph.D. in cryptography at the Technion-Israel Institute of Technology; from 2017 to 2020, he served as the research director at Israeli cryptocurrency company Orbs.
Currently, the identities of the traders related to the "12 million dollars stolen from other traders" that the Peraire-Bueno brothers are accused of remain unidentified.
"MEV is a highly secretive world," Cutler recalled a cryptocurrency conference where "traders wore motorcycle helmets to conceal their identities." He stated, "It will be interesting to see how the judge and jury handle the complex issues related to MEV in the case."
"At the very least, I will closely follow the trial to see what depth of consideration the court exhibits when contemplating future precedents," he said.
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