Two young men, graduates of one of the country’s top universities, are indicted and face life in prison for stealing $25 million in Ethereum cryptocurrency by hacking its technology in a novel hacking attack that raises concerns over crypto safety.
According to a Department of Justice press release, brothers Anton Peraire-Bueno, 24, of Boston, and James Peraire-Bueno, 28, of New York, are charged with the crime of wire fraud and attempted money laundering, after stealing $25 million in Ethereum coins from cryptocurrency users.
The two brothers allegedly used sophisticated techniques and had been preparing their attack for months, setting up shell companies and using multiple cryptocurrency addresses, according to an unsealed indictment.
They then executed the attack in about 12 seconds, stealing $25 million worth of Ethereum coins, the indictment continues.
Investigators said this was done by tampering with the movement of the Ethereum coins, in other words, the technology over which the coins are transferred.
“The defendants’ scheme calls the very integrity of the blockchain into question,” Attorney Damian Williams for the Southern District of New York said.
The brothers studied computer science and mathematics at one of the country’s top universities, not disclosed in the press release.
“The brothers allegedly used their specialized skills and education to tamper with and manipulate the protocols relied upon by millions of Ethereum users across the globe,” Mr. Williams said.
Special Agent in Charge Thomas Fattorusso of the IRS Criminal Investigation (IRS-CI) New York Field Office said that it was the first time this type of crime had been seen.
“These brothers allegedly committed a first-of-its-kind manipulation of the Ethereum blockchain by fraudulently gaining access to pending transactions, altering the movement of the electronic currency, and ultimately stealing $25 million in cryptocurrency from their victims,” Mr. Fattorusso said. “In this case, IRS-CI New York’s Cyber Unit simply followed the money.”
According to the press release, Anton Peraire-Bueno and James Peraire-Bueno allegedly manipulated the process and protocols by which transactions were validated and added to the Ethereum blockchain. “In doing so, they fraudulently gained access to pending private transactions and used that access to alter certain transactions and obtain their victims’ cryptocurrency.”
The release further alleged that the two brothers planned their attack over months. They learned the trading behaviors of their victims, took numerous steps to conceal their identities, including setting up shell companies, and had the groundwork done to hide the stolen money. They also ” transferred the stolen cryptocurrency through a series of transactions designed to conceal the source and ownership of the stolen funds.”
They also searched online for information about how to carry out the attack, ways to conceal their involvement, cryptocurrency exchanges with limited “know your customer” procedures that they could use to launder the money, attorneys with expertise in cryptocurrency cases, and extradition procedures, the DOJ release continued.
If convicted, Anton Peraire-Bueno and James Peraire-Bueno each face a maximum penalty of 20 years in prison for each of the three counts.
IRS-CI New York’s Cyber Investigations Unit investigated the case with the assistance of the U.S. Customs and Border Protection and the New York City Police Department.
One of the biggest cryptocurrency scandals in recent times is the FTX fraud case. FTX was one of the biggest cryptocurrency exchanges at the time. Its founder, 32-year-old Sam Bankman-Fried, has been sentenced to 25 years in prison for defrauding investors and customers of $8 billion.