MIT graduates, accused of $25 million cryptocurrency fraud, blame it on ‘lack of government regulations’
Two MIT-educated brothers, Anton (25) and James Peraire-Bueno (29), are on trial in Manhattan. They allegedly carried out a $25 million cryptocurrency heist on the Ethereum blockchain in April 2023.
Prosecutors say the brothers designed a “first-of-its-kind” fraud scheme that took months of planning. However, they executed it in just 12 seconds.
While prosecutors call it fraud and conspiracy, the defence claims it was a technological loophole, not theft.
They allegedly used “specialised skills developed during their education” at MIT for the heist, according to Business Insider. They also took advantage of their expertise in cryptocurrency trading, according to prosecutors. The brothers allegedly “exploited the very integrity of the Ethereum blockchain“.
“In doing so, they fraudulently gained access to pending private transactions and used that access to alter transactions and obtain their victims’ cryptocurrency,” they claimed.
US District Judge Jessica G. L. Clarke earlier ruled against the defence of the MIT-educated brothers. She barred their lawyers from arguing that the victims had “deserved it”. Judge Clarke stopped defence experts from discussing the lack of regulation in the crypto market.
Jury selection on October 13 resulted in a 12-member panel, comprising seven women and five men. All of them have college degrees. Half of them hold a master’s degree in subjects such as finance, medicine, and education. Most jurors are middle-aged or retired.
MIT brothers’ online searches
The brothers reportedly searched online for terms like “how to wash crypto” and “money laundering statute of limitations” before carrying out the heist. They also looked for “top crypto lawyers” and “fraudulent Ethereum addresses database”. Free on $250,000 bail each, both of them insist they committed no crime.
Their lawyers argue they only outsmarted predatory trading bots using smart coding. The case revolves around a complex multi-step transaction that allegedly turned legitimate crypto trades into worthless junk tokens for other traders.
According to James’ lawyer Patrick Looby’s argument in June, there is “no central authority” to govern the Ethereum blockchain.
“There are no government regulations. Instead, economic incentives guide parties’ behaviour,” Looby said. He also argued that “there needs to be a promise to the victim” to call it a fraud.
The Massachusetts Institute of Technology, one of the world’s top universities, has produced numerous successful professionals in the past. Notable names include Dropbox co-founder Drew Houston, Hewlett-Packard CEO Carly Fiorina and Nobel Prize-winning physicist Richard Feynman.
