Hey everybody. Welcome back to the Elon Musk podcast this. Is a show where we discuss the critical crossroads, the shape SpaceX. Tesla X, The Boring Company, and Neural Link, and I'm Your Host Will Walden. Two brothers, both former students at the Massachusetts Institute of Technology, or MIT, have been charged with stealing $25 million in cryptocurrency by exploiting a vulnerability in the Ethereum blockchain.
The US Department of Justice, or the DOJ, unsealed the indictment on Wednesday, revealing the rapid execution of the scheme. That took. Just 12 seconds. US Attorney Damian Williams stated that the scheme was so sophisticated that it calls the very integrity of the blockchain into question. He emphasized that the brothers, using their advanced education and computer science and mathematics, managed to manipulate the Ethereum blockchain protocols impacting millions of users worldwide.
Oh, the accused, Anton Bueno and James Bueno, were arrested on Tuesday as 24 and 28, respectively, and they face charges including conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. And if convicted, each brother could face up to 20 years in prison for each count. The indictment details that the alleged scheme began in December 2022.
After months of planning, the brothers allegedly used their expertise to gain unauthorized access to quote pending private transactions on the Ethereum blockchain, manipulating these transactions to steal cryptocurrency from their victims. And according to the Department of Justice, the brothers exploited a window of vulnerability in the blockchain that exists between the initiation of a transaction and its addition to the blockchain.
This period involves the structuring of transactions into proposed blocks, which are then validated and added to the blockchain. And the brothers allegedly set up a network of Ethereum validators using shell companies and foreign exchanges to conceal their identities. This allowed them to manipulate the transaction process, reordering blocks to their advantage and recapturing the cryptocurrency intended for others. And when victims realized their funds have been stolen, they
requested returns. But the brothers reportedly refused and took steps to hide their illicit gains. This included creating shell companies and using private cryptocurrency addresses and foreign exchanges that lack stringent Know Your Customer Procedures, or KYC. Their online search history indicated extensive research into the methods and risks associated with their scheme.
They search for terms such as how to wash crypto exchanges with no KYC, top crypto lawyers, money laundering, statute of limitations, and does the United States extradite to quote foreign countries. Now the scheme was uncovered by investigators who traced the financial transactions. Thomas Fetterusso, Special Agent in Charge of the IRS New York Field Office, highlighted the role of both advanced technology and traditional investigative methods in cracking this case.
The indictments time coincides with the SE CS review of an Ethereum exchange trading fund or ETF. The alleged fund could impact the SE CS decision with chair Gary Gensler expressing concerns about investor protection in the
volatile cryptocurrency market. Now, Deputy Attorney General Lisa Monaco described the theft as a technologically sophisticated cutting edge scheme that the brothers executed swiftly after meticulous planning, and the IRS played a crucial role in unraveling this complex fraud. The prosecutors allege that the brothers use their specialized skills, their education at MIT, to exploit Ethereum's
transaction validation process. This process involves structuring pending transactions into blocks and then validating them, with the brothers, manipulating them for their own benefit. And the DOJ claims that the brothers actions exploited the system's vulnerabilities to gain unauthorized access and alter transactions. Stealing cryptocurrency. During the brief window before transactions were permanently recorded on the blockchain,
about 12 seconds altogether. To steal all this money and when confronted, the brothers allegedly took extensive measures to launder the stolen funds and cover their tracks. This included setting up multiple private cryptocurrency addresses and using foreign exchanges without KYC protocols to obscure the trail of their illicit activities. And the brothers efforts to hide their activities involved
detailed preparations. To evade legal repercussions, they searched for legal advice and information on jurisdictions without extradition treaties with the US, demonstrating their awareness of their potential legal consequences. And this indictment calls for the seizure of several bank accounts and personal property linked to the brothers, underscoring the scale of their alleged financial maneuvers designed to conceal their identities in the ownership of
these stolen funds. And the DOJ's allegations for the first criminal charges of this kind mark a significant development in the enforcement of cryptocurrency regulations. The schemes, unprecedented in nature, underscores the challenges faced by authorities in policing the rapidly evolving
digital currency space. This case, unfolding against the backdrop of the SC, CS considerations on Ethereum ETFs, emphasizes an ongoing need for robust regulatory frameworks to protect investors and maintain the integrity of blockchain technologies. So these two educated brothers face severe legal consequences for allegedly orchestrating a rapid and sophisticated cryptocurrency heist exploiting
the Ethereum blockchain. The case is significant because it has concerns about blockchain security and the need for stringent regulatory measures in the cryptocurrency industry. If you can steal this much in 12 seconds, well, you could steal anything in a little bit more time. Hey, thank you so much for listening today. I really do appreciate your support.
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