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The Department of Justice on Wednesday announced the indictment of two brothers for allegedly stealing $25 million in cryptocurrency within roughly 12 seconds.
The DOJ called it a “first-of-its kind” fraud, detailing the seconds-long scheme where the brothers allegedly manipulated the Ethereum blockchain to redirect pending transactions and steal $25 million in cryptocurrency.
“As we allege, the defendants’ scheme calls the very integrity of the blockchain into question,” said U.S. Attorney Damian Williams for the Southern District of New York in a statement.
Anton Peraire-Bueno, 24, and James Peraire-Bueno, 28, were arrested Tuesday on the following charges: conspiracy to commit wire fraud, wire fraud and money laundering.
The Peraire-Bueno brothers studied math and computer science “at one of the most prestigious universities in the country,” according to the DOJ, adding that education would have helped them carry out the alleged fraud.
If convicted, the brothers face a maximum of 20 years in prison for each of the three counts.
The charges come ahead of a long-awaited ruling from the Securities and Exchange Commission on whether to approve an Ethereum exchange-traded fund, which would allow investors access to the ether token without having to directly own the cryptocurrency. The deadline for the SEC to complete its review ahead of a ruling is later this month.
Issuers of Bitcoin ETFs have already been bearish on the chances that the SEC will approve an ether ETF.
The DOJ’s announcement of the alleged fraud could draw further skepticism as the SEC completes its Ethereum ETF review.
SEC Chair Gary Gensler has previously expressed concern about lacking regulation in crypto markets that could make it a dangerous listing for investors.
“To me, the fundamental question is, how do we ensure that the American investor is protected? And right now, they’re not getting the required or needed disclosures,” Gensler said in an interview on CNBC’s “Squawk Box” earlier this month. “And the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do.”