MIT Students Steal $25M In Seconds By Exploiting ETH Blockchain Bug, Get Caught

The US Department of Justice has discovered a huge cryptocurrency scam that two intelligent siblings allegedly carried out. The brothers are accused of manipulating the Ethereum network to steal $25 million quickly, an extraordinary amount of money that has raised questions about the blockchain’s integrity.

US Attorney Damian Williams claims that the brothers, Anton (24) and James Peraire-Bueno (28), used their major maths and computer science education from a prominent university to plan the extensive scam. Williams highlighted the operation’s daring by saying, “And once they put their plan into action, their heist only took 12 seconds to complete.”

According to the indictment, the brothers, who are MIT alumni, carefully planned their scheme and used their knowledge of cryptocurrency trading to compromise “pending private transactions” on the Ethereum network. The siblings are accused of manipulating transaction blocks to steal victims’ cryptocurrency holdings by taking advantage of a flaw in the blockchain validation procedure.

Their primary strategy involved concealing their names and masking their criminal actions by using foreign exchanges and hidden shell businesses to establish a network of Ethereum validators. The brothers allegedly took over the validation process by using bait transactions to draw in specialized bots. They then allegedly rearranged blocks to their advantage before adding them to the blockchain.

As victims attempted to reclaim their stolen funds, the brothers rebuffed their requests, clandestinely concealing the ill-gotten gains. Their efforts to evade detection extended to setting up shell companies and utilizing multiple private cryptocurrency addresses and foreign exchanges with lax “know your customer” (KYC) protocols.

To track down the perpetrators, IRS Criminal Investigation (IRS-CI) utilized advanced technology and traditional investigative methods, leading to the brothers’ indictment.

“Regardless of the case’s complexity, we continue to lead the effort in financial criminal investigations with cutting-edge technology and good old-fashioned investigative work, on and off the blockchain,” said Thomas Fattorusso of the IRS-CI New York Field Office, emphasizing their dedication to financial crime investigations.

This complex plan was revealed while the Securities and Exchange Commission (SEC) considered approving an Ethereum exchange-traded fund (ETF). The alleged fraud may intensify SEC scrutiny because Chair Gary Gensler prioritizes investor safety in the rapidly changing cryptocurrency ecosystem.