Two brothers manipulated Ethereum protocols to steal $25M — Justice Dept

U.S. officials said the individuals engaged in a "first-of-its-kind manipulation of the Ethereum blockchain" by tampering with its protocols over validating transactions.

Authorities with the United States Department of Justice have unsealed an indictment alleging that two individuals stole $25 million in cryptocurrency in a scheme that “exploit[ed] the very integrity of the Ethereum blockchain.”

In a May 15 notice, the Justice Department charged brothers Anton Peraire-Bueno and James Pepaire-Bueno with conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. According to U.S. officials, the brothers fraudulently obtained $25 million worth of crypto “within approximately 12 seconds” using a scheme that “calls the very integrity of the blockchain into question.”

“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,” said Thomas Fattorusso, a special agent with the IRS Criminal Investigation’s New York Field Office.

U.S. authorities said the brothers rejected requests to return the stolen funds and hid the assets using shell companies and foreign crypto exchanges, transferring them to several wallets. They could face up to 20 years in prison for each count if convicted.

This is a developing story, and further information will be added as it becomes available.