Ethereum MEV Case Ends in Mistrial: Jury Deadlocked on $25 Million Exploit
Nov 10
2 min read
A federal judge declared a mistrial Friday in the case of two brothers accused of exploiting Ethereum's network for approximately $25 million. Anton and James Peraire-Bueno, who were indicted on fraud charges, faced allegations of manipulating Maximum Extractable Value (MEV) bots. The jury, after three days of deliberation, could not reach a unanimous verdict, leaving the legal implications of on-chain fraud unresolved.
Key Takeaways
Two brothers, Anton and James Peraire-Bueno, were charged with fraud for a $25 million Ethereum exploit in April 2023.
They allegedly used a controlled validator to manipulate MEV bots, resulting in a 12-second exploit.
A New York jury declared a mistrial after failing to reach a unanimous verdict following three days of deliberation.
The case raised significant legal questions about applying traditional fraud statutes to blockchain mechanics.
The $25 Million "Bait-and-Switch" Exploit
Prosecutors alleged that the Peraire-Bueno brothers, both educated at MIT, executed a sophisticated exploit in just 12 seconds in April 2023. Unlike traditional cyberattacks, their method did not involve breaching servers or stealing credentials. Instead, they targeted MEV bots, which are algorithms designed to optimize transaction ordering for profit. The brothers allegedly lured these bots into posting illiquid token trades by using a validator they controlled. They then swapped these "bait" transactions with their own, effectively blocking the bots' intended purchases while absconding with the tokens the bots had initially spent. This maneuver netted them approximately 4,200 ETH, valued at around $25 million at the time.
Legal Questions and a Hung Jury
The defense argued that while the brothers' actions might have been manipulative, they did not meet the legal definition of fraud under the wire fraud statute. Their lawyers contended that the statute was unconstitutionally vague when applied to manipulating blockchain ordering mechanisms, failing to provide clear notice that such actions were criminal. The prosecution, however, stated that the attack "calls the very integrity of the blockchain into question."
After a four-week trial, the jury of five men and seven women deliberated for three days without reaching a unanimous decision. Jurors reportedly expressed exhaustion and difficulty in agreeing on how to apply the law to the complex on-chain mechanics. Some jurors were described as having broken down in tears due to the stress of deliberation. This resulted in Judge Jessica Clarke declaring a mistrial.
Future of the Case and MEV
The declaration of a mistrial means the prosecution has the option to retry the case. However, the Justice Department's stance on prosecuting software developers has evolved. The case served as a crucial test for how U.S. fraud laws apply to the concept of Maximum Extractable Value (MEV) in the cryptocurrency space. The unresolved questions about "honest validation" duties and when protocol-level tactics cross into fraud will continue to impact the Ethereum validator ecosystem.
Sources
Mistrial Declared in Ethereum MEV Case—Jury Split Over $25M Exploit, Yahoo.
How 2 Brothers Defrauded ETH of Millions, 99Bitcoins.