Ethereum $25 million Theft: Two Brothers arrested

[TravelMug]

In not so latest news,



https://www.justice.gov/opa/pr/two-brothers-arrested-attacking-ethereum-blockchain-and-stealing-25m-cryptocurrency

So two brothers get arrested with a huge $25 million that they've stole from Ethereum as the two manipulated the Ethereum blockchain. It is reported that the heist took only "12 seconds" and it's the first of it's kind.

However, the US government are diligent to track down the culprit, namely, Anton Peraire-Bueno and James Pepaire-Bueno were arrested in Boston and New York.

I mean they studied one of the most prestigious schools in the US with mathematics and computer science degree. Only that they have used it to steal money. And if they are indicted, they are going to face maximum penalty of 20 years in prison for each count.

[Yaunfitda]

It just shows that Ethereum Blockchain is not that secure if the brothers was able to steal that huge amount of money in record breaking 12 seconds? Could be the biggest and fastest in any crypto related crimes. I do hope that after this heist, Ethereum developers was able to close the loophole already and then make the integrity of the blockchain more safeguarded. And the title could be "gone in 12 seconds". 

[Lucius]

~snip~
I mean they studied one of the most prestigious schools in the US with mathematics and computer science degree. Only that they have used it to steal money. And if they are indicted, they are going to face maximum penalty of 20 years in prison for each count.

Do people still think that those who study at prestigious schools and colleges must really be smart people? If you have money, you can buy everything, and that includes proof that you graduated. All those scammers who first steal something, and only then think about what to do with it, are for me personally in the category of very stupid people.

The longer they stay in prison, the better for everyone, because if they did it once, they will do something similar as soon as they have the chance again.

[zasad@]

Unfortunately, I still didn’t understand what they did.
If it is Miner-Extractable Value (MEV), it was used by many when it was available.

Using the specialized skills developed during their education, as well as their expertise in cryptocurrency trading, Anton Peraire-Bueno and James Pepaire-Bueno exploited the very integrity of the Ethereum blockchain in order to fraudulently obtain approximately $25 million worth of cryptocurrency from victim cryptocurrency traders (the “Exploit”).

Usually such exploits are described so that other projects take this experience into account. A person can be the smartest mathematician, but he cannot influence the integrity of the Ethereum blockchain.

[Dave1]

Unfortunately, I still didn’t understand what they did.
If it is Miner-Extractable Value (MEV), it was used by many when it was available.

Using the specialized skills developed during their education, as well as their expertise in cryptocurrency trading, Anton Peraire-Bueno and James Pepaire-Bueno exploited the very integrity of the Ethereum blockchain in order to fraudulently obtain approximately $25 million worth of cryptocurrency from victim cryptocurrency traders (the “Exploit”).

Usually such exploits are described so that other projects take this experience into account. A person can be the smartest mathematician, but he cannot influence the integrity of the Ethereum blockchain.

So this exploit is post POW, which means that Ethereum developers are the one to be blame with this loophole when they move to POS?

I'm not an expert here, I'm just trying to understand because when Ethereum are still under the POW protocol, yeah maybe there could be exploits here and there but I'm not sure if they've lost this kind of huge money before.

Hopefully as you have said, since this exploit is well-known about developers of other projects, they could have close the loophole already.

[zasad@]

Unfortunately, I still didn’t understand what they did.
If it is Miner-Extractable Value (MEV), it was used by many when it was available.

Using the specialized skills developed during their education, as well as their expertise in cryptocurrency trading, Anton Peraire-Bueno and James Pepaire-Bueno exploited the very integrity of the Ethereum blockchain in order to fraudulently obtain approximately $25 million worth of cryptocurrency from victim cryptocurrency traders (the “Exploit”).

Usually such exploits are described so that other projects take this experience into account. A person can be the smartest mathematician, but he cannot influence the integrity of the Ethereum blockchain.

So this exploit is post POW, which means that Ethereum developers are the one to be blame with this loophole when they move to POS?

I'm not an expert here, I'm just trying to understand because when Ethereum are still under the POW protocol, yeah maybe there could be exploits here and there but I'm not sure if they've lost this kind of huge money before.

Hopefully as you have said, since this exploit is well-known about developers of other projects, they could have close the loophole already.

Ethereum has not been using the POW protocol for a long time. The essence of MEV was that miners could change the order of transactions in a block and accordingly make a profit, because there are many large pools. In the new Pos protocol there is also such a possibility, but who uses DeFi, he knows services how to hide their transactions. But it was not forbidden.
But I didn't realize what these hackers did.

[YOSHIE]

This is a rare case and is rarely revealed by law enforcement. For me, anyone who catches and uncovers this case, they deserve appreciation and appreciation, what they have done has saved crypto users all over the world, from their actions in fraud.

If the punishment handed down to them is as said.

And if they are indicted, they are going to face maximum penalty of 20 years in prison for each count.

I agree with what was said by: @Lisa Monaco.

“Unfortunately for the defendants, their alleged crimes were no match for Department of Justice prosecutors and IRS agents, who unraveled this first-of-its kind wire fraud and money laundering scheme.

I agree that if they were sentenced to death, 20 years in prison would not deter them.

[blckhawk]

It just shows that Ethereum Blockchain is not that secure if the brothers was able to steal that huge amount of money in record breaking 12 seconds? Could be the biggest and fastest in any crypto related crimes. I do hope that after this heist, Ethereum developers was able to close the loophole already and then make the integrity of the blockchain more safeguarded. And the title could be "gone in 12 seconds". 

Exactly but I really want to see how they have done it, pretty sure that there's going to be an explanation as how they were able to do it, I'm not really surprised that Ethereum was easily attacked, I'm more surprised that the government about it and they diligently tracked the perpetrators, never heard of them able to move this fast. I guess there's someone in the government that's either doing their job or they're ETH investor and they're one of the many people that got hoodwinked by these two brothers.

[zasad@]

It just shows that Ethereum Blockchain is not that secure if the brothers was able to steal that huge amount of money in record breaking 12 seconds? Could be the biggest and fastest in any crypto related crimes. I do hope that after this heist, Ethereum developers was able to close the loophole already and then make the integrity of the blockchain more safeguarded. And the title could be "gone in 12 seconds".  

Exactly but I really want to see how they have done it, pretty sure that there's going to be an explanation as how they were able to do it, I'm not really surprised that Ethereum was easily attacked, I'm more surprised that the government about it and they diligently tracked the perpetrators, never heard of them able to move this fast. I guess there's someone in the government that's either doing their job or they're ETH investor and they're one of the many people that got hoodwinked by these two brothers.

Attack is linked to MEVs. All the mining pools were doing it, so I don't understand why the arrest?

What Is Maximal Extractable Value (MEV)?
https://chain.link/education-hub/maximal-extractable-value-mev

The administration of centralized exchanges sees all participants' bets and can profit from it, which it successfully does. Also in this case, the one who forms the block can profit from DeFi transactions in the block.

[yhiaali3]

According to the article I read on Cointelegraph, the US Department of Justice charged the brothers Anton Berer Bueno and James Berer Bueno not only with conspiracy to commit wire fraud and theft, but also with conspiracy to commit money laundering.

The brothers tampered with Ethereum's protocols for validating transactions. This involved fraudulently accessing pending transactions and changing the movement of coins, which helped them steal $25 million in cryptocurrencies from their victims.

The unfortunate thing is that the Ethereum network has become vulnerable to manipulation, and the other unfortunate thing is that these young college students have used their skills for crime instead of doing useful things.

[Maus0728]

Does anyone have a video essay that would explain how they were able to do it, I'm learning a lot of cybersecurity stuff recently and in my work so I'm trying to expand on things that's out there, I think that having an idea of how they do it can help me along the way. Doing it in 12 seconds is a really crazy thing, that would probably took them a lot of preparation to be able to pull this off.

[pakhitheboss]

So two brothers get arrested with a huge $25 million that they've stole from Ethereum as the two manipulated the Ethereum blockchain. It is reported that the heist took only "12 seconds" and it's the first of it's kind.

Some intelligent minds using it get rich quickly with efforts put into finding the vulnerability of the network. That's all I can say about these two guys who are related to each other.

However, the US government are diligent to track down the culprit, namely, Anton Peraire-Bueno and James Pepaire-Bueno were arrested in Boston and New York.

The government authorities are always diligent when a crime is done with digital currencies. These two boys were intelligent in finding vulnerability with the codes but were not that smart enough to hide themselves from the the authorities.  

I mean they studied one of the most prestigious schools in the US with mathematics and computer science degree. Only that they have used it to steal money. And if they are indicted, they are going to face maximum penalty of 20 years in prison for each count.

I agree they both got themselves wasted! In an ideal situation, they should have contacted the developers and asked them for remuneration to disclose the issue with the Ethereum network. They would have been paid an amount that they would have used for their development in this domain. They missed that opportunity now they will be scared for life and will live like a normal people do till they die.

[zasad@]

Does anyone have a video essay that would explain how they were able to do it, I'm learning a lot of cybersecurity stuff recently and in my work so I'm trying to expand on things that's out there, I think that having an idea of how they do it can help me along the way. Doing it in 12 seconds is a really crazy thing, that would probably took them a lot of preparation to be able to pull this off.

This is very difficult to do on the new protocol, but nevertheless possible if validators cooperate with relays. MEV is not fraud, but the lack of open blockchain, there are now many ways to hide your transactions.
https://beaconcha.in/relays

[blckhawk]

~

Attack is linked to MEVs. All the mining pools were doing it, so I don't understand why the arrest?

What Is Maximal Extractable Value (MEV)?
https://chain.link/education-hub/maximal-extractable-value-mev

The administration of centralized exchanges sees all participants' bets and can profit from it, which it successfully does. Also in this case, the one who forms the block can profit from DeFi transactions in the block.

Hello, I know this might be too much but I'm not really that good with technology and this kind of stuff, is there like a layman's explanation about this one because it seems to be a really complicated thing. If I understand correctly, did the two brothers hijacked the blockchain so that they can get all of the fees and the transactions? Or I'm totally wrong?

[zasad@]

~

Attack is linked to MEVs. All the mining pools were doing it, so I don't understand why the arrest?

What Is Maximal Extractable Value (MEV)?
https://chain.link/education-hub/maximal-extractable-value-mev

The administration of centralized exchanges sees all participants' bets and can profit from it, which it successfully does. Also in this case, the one who forms the block can profit from DeFi transactions in the block.

Hello, I know this might be too much but I'm not really that good with technology and this kind of stuff, is there like a layman's explanation about this one because it seems to be a really complicated thing. If I understand correctly, did the two brothers hijacked the blockchain so that they can get all of the fees and the transactions? Or I'm totally wrong?

You should read more and watch a training video about MEV. Transaction fees have nothing to do with it.
In simple terms, DeFi transactions in a block are buy and sell orders. If you form a block, you can earn on price changes by inserting your transactions.
It's like arbitrage on exchanges, only in DeFi all exchanges are united by smart contracts in one ecosystem.

[blckhawk]

~

You should read more and watch a training video about MEV. Transaction fees have nothing to do with it.
In simple terms, DeFi transactions in a block are buy and sell orders. If you form a block, you can earn on price changes by inserting your transactions.
It's like arbitrage on exchanges, only in DeFi all exchanges are united by smart contracts in one ecosystem.

I am totally wrong and I think that I can somewhat get what you mean, it's a really smart way of stealing people's funds, they're like basically manipulating the transactions to their favor right? They should be recruited by the Ethereum because they were able to do this kind of thing, you know, like putting their skills to good use, such skills in this field is a waste if they just let them go to jail.

[zasad@]

~

You should read more and watch a training video about MEV. Transaction fees have nothing to do with it.
In simple terms, DeFi transactions in a block are buy and sell orders. If you form a block, you can earn on price changes by inserting your transactions.
It's like arbitrage on exchanges, only in DeFi all exchanges are united by smart contracts in one ecosystem.

I am totally wrong and I think that I can somewhat get what you mean, it's a really smart way of stealing people's funds, they're like basically manipulating the transactions to their favor right? They should be recruited by the Ethereum because they were able to do this kind of thing, you know, like putting their skills to good use, such skills in this field is a waste if they just let them go to jail.

This is not stealing. If previously the miner was responsible for forming a block, now validators are responsible for this, who can use Relays to get MEV. This is not a crime, because money is not stolen from users' accounts. If the one who forms sees an arbitrage opportunity, then he will insert his transaction and make a profit. Transactions of other users will not be executed and they will lose some ETH in fees.

___
MEV is not a crime. I have given a list of relays above who receive additional income in this way and there are no charges against them.

From reading the news I understood that the accused used the capabilities of MEV, but I did not understand the essence of the crime.

[Text]

It’s disheartening to see that individuals with such advanced skills and education would allegedly use their knowledge to exploit the system and defraud innocent traders.

While the charges are significant, it's crucial to remember that an indictment is merely an allegation, and all defendants are presumed innocent until proven guilty. The justice system will thoroughly examine the evidence, and we must await the final judgment.

[zasad@]

It’s disheartening to see that individuals with such advanced skills and education would allegedly use their knowledge to exploit the system and defraud innocent traders.

While the charges are significant, it's crucial to remember that an indictment is merely an allegation, and all defendants are presumed innocent until proven guilty. The justice system will thoroughly examine the evidence, and we must await the final judgment.

Can you yourself explain the deception of traders? A smart contract may or may not be fulfilled, it depends on different moments and any DeFi trader knows it.

Unfortunately blockchain with smart contracts has disadvantages because miners and validators can use MEV.