An unsealed indictment Wednesday accused Anton Peraire-Bueno, 24, of Boston, and James Pepaire-Bueno, 28, of New York, of conspiracy to commit wire fraud and conspiracy to commit money laundering.
According to the indictment, the charges stem from a creative but illegal scheme the defendants devised to manipulate the Ethereum blockchain’s security. The intention was to illegally obtain about $25 million in cryptocurrency in just under 12 seconds.
Anton Peraire-Bueno and James Peraire-Bueno were apprehended yesterday in Boston and New York, respectively.
The IRS-CI New York’s Cyber Investigations Unit led the investigation, with support from U.S. Customs and Border Protection and the New York City Police Department.
“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.”
The indictment alleges that brothers Anton Peraire-Bueno and James Pepaire-Bueno, both graduates in mathematics and computer science from one of the nation’s top universities, misused their academic training and cryptocurrency trading expertise.
They allegedly compromised the Ethereum blockchain’s integrity to illegally acquire around $25 million in cryptocurrency from unsuspecting traders.
This scheme, reportedly the first of its kind, involved manipulating the transaction validation and addition processes on the Ethereum blockchain. The brothers are accused of accessing and altering pending private transactions, allowing them to steal cryptocurrency.
Despite requests to return the stolen assets, they reportedly refused and took multiple steps to conceal their illicit gains.
Over several months, Anton Peraire-Bueno and James Pepaire-Bueno carefully orchestrated their scheme, studying the trading patterns of the traders whose cryptocurrency they planned to steal.
They took extensive measures to hide their identities and prepare to conceal the proceeds. They established shell companies and utilized various private cryptocurrency addresses and international cryptocurrency exchanges.
Following the scheme, the brothers executed several transactions to obscure the stolen cryptocurrency’s origin and ownership.
Throughout the planning, execution, and aftermath of the Exploit, Anton Peraire-Bueno and James Pepaire-Bueno conducted online searches on topics.
This included execution methods for the Exploit, techniques for concealing their involvement, cryptocurrency exchanges with lax “know your customer” policies for laundering proceeds, attorneys specializing in cryptocurrency, extradition processes, and the crimes detailed in the indictment.
If convicted, Anton Peraire-Bueno and James Pepaire-Bueno each face up to 20 years in prison per count.