Two brothers, 24 and 28 years old, were arrested in Boston and New York last Tuesday accused of fraud and embezzlement of approximately $25 million. It would have been another theft if the two young men, both studying mathematics and computer science at MIT, had not first “cracked” the blockchain technology on which Ethereum is based to extract the amount in cryptocurrency “in a matter of seconds”.

According to US prosecutors, brothers Anton Peraire-Bueno and James Peraire-Bueno used the skills they had acquired while studying at the prestigious American university to exploit “the very integrity of the Ethereum blockchain in order to fraudulently” obtain the funds, in “a first-of-its-kind electronic fraud and money laundering scheme”.

The indictment states that the Peraire-Bueno brothers “carefully planned and executed” the attack, starting sometime in December 2022, creating a four-step plan: 1) The baiting, 2) The “unlocking” of the block, 3) The search, and 4) The replication-sequencing.

The two brothers created a series of Ethereum validators “in a way that concealed their identity through the use of front companies, cryptocurrency intermediary addresses, foreign exchanges and a layer of privacy.” They targeted three traders whose behaviour they had studied for months prior, using “a series of test or decoy trades.

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US prosecutors say the Peraire-Bueno brothers exploited a vulnerability in Etherum’s code, which has since been patched. “In doing so, they fraudulently gained access to pending private transactions and used that access to modify certain transactions and obtain their victims’ cryptocurrency.”

After stealing approximately $25 million worth of cryptocurrency, the Peraire-Bueno brothers allegedly laundered the funds through various shell companies.

If convicted, the Peraire-Bueno brothers face up to 20 years in prison each for each of the three total charges they face.