Feds: Brothers stole $25M in crypto in 12 seconds. Defense: outsmarted bots

https://www.businessinsider.com/crypto-brothers-peraire-bueno-trial-heist-ethereum-blockchain-arguments-2025-10

by pseudolus • 9 months ago

40 32 9 months ago

businessinsider.com

pseudolus• 9 months ago

https://archive.ph/FDpSu

ano-ther• 9 months ago

Reminds me of this recent court case in Germany.

https://www.heise.de/en/news/Higher-Regional-Court-Virtual-t...

busterarm3• 9 months ago

That one made my eyebrows hit the ceiling. If crypto can't be stolen because it isn't a physical asset, what does that mean for money that's in your bank account?

Wait, maybe that's the point.

saubeidl• 9 months ago

Crypto isn't money.

lando2319• 9 months ago

I'm not a lawyer but it seems like if they booked a transaction based on a basket of goods, and then seconds later changed that basket of goods, seems like in the physical world that would be fraud

duttish• 9 months ago

Cryptocurrency markets keep reinventing fraud and fraud mitigation one century at a time.

gdulli• 9 months ago

The fraud is coming from inside the house!

dbdr• 9 months ago

In this case the "fraud mitigation" seems to be a bugfix: https://github.com/flashbots/mev-boost-relay/commit/3025635e...

It's an interesting legal question what will be decided for this case, but it's also satisfying that the underlying bug can be fixed. That seems quite different from a traditional fraud, which can be done over and over again, and needs to be prosecuted every time.

Deukhoofd• 9 months ago

And the defence of "there was no communication between the two brothers and the traders" feels really weak as well. Of course there was a communication, they put a trade offer online, and it was accepted by a trader, albeit automatically.

The search terms for how to evade fraud is also not going to help them.

I wonder if their lawyer advised them not to take the plea deal, it doesn't sound like they have a high chance of getting away with it.

crote2• 9 months ago

The search terms for how to evade fraud is also not going to help them.

If you're trying to do large-scale taxes, that's just called a "ruling": not sure if the sketchy-looking loophole you found is legal? Ask the tax man for legally-binding advice!

Fade_Dance• 9 months ago

The physical world is within regulated frameworks though. There is no regulatory body in charge of the Ethereum blockchain.

The prosecution is alleging that there was a "promise" to the victim, which would let the transaction breach the boundaries of the crypto universe and be classified as real world fraud between two individual parties, but I just don't see how there was any sort of "promise" made here. First of all, they traded against an automated trading bot. Second, a bid or ask and market liquidity is not a "promise". I trade for a living and market makers suddenly pull liquidity all the time when it suits them, on millisecond time-frames. Granted, what the brothers did is essentially "spoofing" or posting bids and asks with the intent to move markets, so the question here to me boils down to is crypto spoofing illegal or not. Perhaps that depends on the jurisdiction/and or decentralized nature of the exchange that they were posting the offers on. I would think that if they can get charged for this then the majority of trading on thousands of "shitcoins" is outright illegal activity by extension though.

On a much more simplistic level, if you're coding up in ethereum arbitrage bot, and it makes a bad high frequency arb trade... tough luck? I was under the impression that this was sort of the point of crypto markets, to escape regulations and be a freeform, decentralized trading venue.

busterarm3• 9 months ago

An automated trading bot is just some person/company's agent. It can still be a victim of a fraud.

I think spoofing should quite obviously be illegal. It's basically contract fraud.

I was under the impression that this was sort of the point of crypto markets, to escape regulations and be a freeform, decentralized trading venue.

"Escaping regulations" is some libertarian fever dream. There is no such thing as "the law doesn't apply to you" if you make the right people angry enough.

crote2• 9 months ago

To me it sounds like they acted on the sale before it was finished.

Imagine you see Taylor Swift tickets for sale, so you start buying them. Meanwhile, you also start booking a hotel room. The Taylor Swift purchase fails because they are sold out by the time you try to finish your purchase - but at that point the hotel room booking has already succeeded! Should you be able to blame either Ms. Swift or the hotel for having to pay a cancellation fee on the now-worthless room?

From an automated trading perspective it makes sense to execute both orders at once as it minimizes the amount of time you have to hold onto it (during which your potential gain can evaporate or even turn into a loss), but it does expose you to the risk of cancellation. To me that sounds like the cost of doing business?

lm28469• 9 months ago

wants deregulation
gets deregulation

"b-bu-but no not like this"

pavel_lishin3• 9 months ago

I feel like our discussions of whether this was fraud or not - in the practical and ethical sense, if not the legal one - hinges entirely on the details of what these guys did, details that are not present in the article.

So not only are we not lawyers, we're barely even readers.

postflopclarity• 9 months ago

you can read what happened here: https://hackmd.io/@dmarz/total-eclipse-of-the-relay

pavel_lishin3• 9 months ago

This is going to be fun to explain to a presumably non-technical jury.

mindslight2• 9 months ago

Something we can easily infer is that the counterparty must be a connected Trump donor.

I have to wonder if there is some deeper connection whereby the introduction of this large not-yet-regulated economic sector actually creates pressure to move our whole society towards an oligarchic mobster/patronage style government. In a steady state where laws are widely known, it's harder to eek out an edge by breaking laws and then buying your way out of trouble - with the law being clear, the Schelling point is to be opposed to you. And an aggrieved counterparty can spend some resources to make sure it stays that way, even if they're not necessarily in favor with the ruling party.

Whereas with this case, nobody actually knows what the law "is" or really even what it "should be". Cryptocurrency was designed on a strong assertion of "code is law". But this doesn't keep governments from inserting their own semantics after the fact. Since there is no clear diving line, most people are not predisposed to thinking it should go one way or the other. This makes having a connection to the big boss man who can put his finger on the scale become much more relevant, and therefore much more valuable.

pavel_lishin3• 9 months ago

Something we can easily infer is that the counterparty must be a connected Trump donor.

How so?

bfkwlfkjf2• 9 months ago

It's gonna be difficult to explain why they were looking for lawyers, laundering, and statutes of limitations, if they didn't think they were doing anything wrong.

blueprint• 9 months ago

I'm curious how their search queries were able to be found, if anyone happens to know details about this.

bfkwlfkjf2• 9 months ago

I don't know details of how, but it's commonplace in serious crimes. If you spend a little time listening to crime YouTubes, many of them go "oh and he was googling how to get rid of the body". I assumed it was as straightforward as the police gets a warrant to get the info from Google.

immibis2• 9 months ago

When you're under criminal investigation they (1) seize your computer and look at the browser history, and (2) ask Google what you searched for. Pretty simple, routine police work in the electronic era.

iAMkenough• 9 months ago

First it falls to the prosecution to prove without a doubt that those searches were conducted by one of the individuals. The article posted here takes the prosecution's word at face value.

xrd• 9 months ago

Am I wrong if this feels like high frequency trading bots here, doing their own dubious things (within the bounds of the law, but not the spirit), got baited into doing something stupid and someone smarter took advantage of that stupidity. It's a fun game to watch.

Ekaros• 9 months ago

To me it sounds like they tried to exploit someone else, but got exploited in turn.

soared• 9 months ago

Why are the authors so aggressive in using scam/fraud/etc terms when discussing the crime, but then spend so little time explaining the defense? This article seems wildly one sided and I’m not a fan of how it’s written.

It looks like both of the author just do clickbait articles - their last ~10 articles are solely about “diddy”.

squokko• 9 months ago

What does it mean to steal crypto if "code is law"?

Feds: Brothers stole $25M in crypto in 12 seconds. Defense: outsmarted bots

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