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The crypto fraud trial of two MIT-educated brothers kicked off with opening statements on Wednesday.
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A prosecutor told an NYC jury that the brothers were on a mission to rip off other traders.
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“In 12 seconds, the defendants tricked their victims out of $25 million,” the prosecutor said.
The two MIT-educated brothers accused in a $25 million cryptocurrency heist were determined to rip off other traders — and even laughed about their victims’ losses, a prosecutor alleged Wednesday during opening statements in the siblings’ fraud trial.
In a lower Manhattan courtroom, Assistant US Attorney Ryan Nees detailed the government’s case against brothers Anton Peraire-Bueno, 25, and James Peraire-Bueno, 29, who they say orchestrated the Ethereum blockchain theft in a matter of seconds.
“In 12 seconds, the defendants tricked their victims out of $25 million,” the prosecutor told the four-woman, eight-man jury, adding that the siblings pulled off the “enormous bait-and-switch” in order to “take other people’s money.”
“The defendants’ goal was to rip other people off,” Nees said.
Nees promised the jurors that they would see private chats in which the brothers and their “co-conspirators” called “their false data poison” and “laughed about tricking their victims into buying shitcoins based on their scam bait.”
The prosecutor told the jury that in one chat from the day after the heist, one sibling said: “The goal here is plausible deniability. Don’t ask, don’t tell. We shouldn’t give a reason to think it’s us.”
The brothers were apparently skeptical of their own plan and referred to it in messages as “sus” — meaning suspicious — and “wondered if others would catch on” to their scheme, the prosecutor said.
If convicted of the conspiracy, wire fraud, and money laundering charges against them, the computer science and math-trained brothers face a maximum sentence of 20 years in prison for each count. The trial is expected to shed light on the controversial use of bots to frontrun crypto trades.
Federal prosecutors alleged in a 19-page indictment that the Peraire-Bueno brothers stole $25 million worth of crypto from Ethereum traders in a “first-of-its-kind” fraud scheme.
The theft was “meticulously planned” over several months and carried out on a day in April 2023, prosecutors say in court documents. The brothers “lured” the victims’ trading bots into a carefully set, fast-acting trap through “bait transactions,” prosecutors allege.
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“They planted a trade that looked like one thing from the outside but was secretly something else,” Nees said in his opening arguments. “Then just as the defendant’s planned, the victims took the bait. Their trap snapped shut. The defendants reeled in the trap and switched the trades. And with that switch, the defendants drained the victims’ accounts of nearly $25 million.”
The ethereum network is at the heart of the modern crypto ecosystem.SOPA Images/Getty Images
Before and after the alleged exploit, prosecutors say, the brothers’ Google searches included the terms: “how to wash crypto,” “top crypto lawyers,” “fraudulent Ethereum addresses database,” and “money laundering statue [sic] of limitations.”
Prosecutors allege that the brothers learned the trading behaviors of the victim traders before the theft and later attempted to conceal their identities and the stolen cryptocurrency funds through shell companies, private cryptocurrency addresses, and foreign cryptocurrency exchanges.
“They knew they had to cover their tracks,” Nees told the jury on Wednesday, alleging that the brothers spent six months “carefully laundering the money.”
The brothers, who remain out on $250,000 bail each, have firmly denied the charges against them.
Their attorneys have argued that there was no fraud at all and that they merely outsmarted some “predatory” automated trading bots.
James Peraire-Bueno’s defense attorney, Katherine Trefz, in her opening statements on Wednesday, told the jury that the evidence would show the brothers and their coworkers “planned a legitimate cryptocurrency trading strategy using publicly available information.”
“They did not believe they were making any misrepresentations or doing anything else illegal,” the lawyer said.
Trefz said that following the “successful” strategy, the reaction in the crypto community was “mixed.”
“Some commentators called it an exploit, sure, but others thought it was innovative, legitimate, even an inevitable strategy to see in this space,” the defense attorney said. “Regardless of what people on the internet said, James and Anton remained firm in their belief that the trading strategy was fair game.”
Anton Peraire-Bueno’s attorney, William W. Fick, told the jury that the brothers “traded aggressively, but they traded in good faith.”
“How is it even possible to allege that a pre-programmed bot was defrauded?” Fick asked the jury.
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