Is sandwich attack illegal too? MIT prodigy brothers who profited $25 million to stand trial

The victim was an MEV bot.

Written by: Miles J. Herszenhorn, Bloomberg

Translated by: Luffy, Foresight News

Two brothers who just graduated from MIT are facing trial this week. This case may unveil a secretive and controversial cryptocurrency trading strategy.

James Peraire-Bueno and Anton Peraire-Bueno are accused of stealing about $25 million from other traders on the Ethereum blockchain through a so-called "sandwich attack." The brothers plead not guilty, arguing that their actions were legitimate operations within an unregulated market, and that the so-called victims were also engaging in similar trades.

Anton Peraire-Bueno (left) and James Peraire-Bueno (right) arriving at the New York federal court on Tuesday

This case has sparked division within the cryptocurrency community. Many are looking forward to the Manhattan federal court trial, which will begin on Wednesday, hoping it will clarify the rules for "Maximal Extractable Value (MEV) strategies." MEV strategies refer to the act of reordering, excluding, or including transactions before they are added to the blockchain.

"To be honest, I never thought this would constitute a crime," said Evan Van Ness, Chief Investment Officer of crypto trading firm TXPool Capital, when discussing the case against the brothers. "If people think crypto is the Wild West, then MEV is the Wild West within the crypto world."

Although some MEV operations are considered to improve the efficiency of crypto markets, sandwich attacks like those allegedly perpetrated by the Peraire-Bueno brothers' victims are highly controversial. Attackers use bots to front-run and back-run other users' trades: first driving up the price, then immediately selling for profit, with the cost borne by the user caught in the middle. Some view this as market manipulation, but it is not currently illegal.

Companies that conduct sandwich attacks usually operate covertly, often going to great lengths to hide their identities. However, in the Peraire-Bueno brothers' trial, one such company will come to light. Court documents show that the main alleged victim is Savannah Technologies—a little-known Israeli company. Its CEO, David Yakira, is expected to testify for the prosecution, confirming that the brothers attacked Savannah's MEV bot, causing the company to lose $13 million.

The Peraire-Bueno brothers' lawyers declined to comment; Yakira and Savannah Technologies' lawyers also refused to respond; prosecutors did not reply to requests for comment.

Prosecutors allege that 29-year-old James and 25-year-old Anton first studied the trading behavior of sandwich attackers, then devised a trap. Sandwich attackers program bots to scan pending transactions on the blockchain for profitable targets—usually large trades or those involving low-liquidity tokens.

The prosecution alleges that the brothers executed their plan in April 2023: they initiated multiple small, low-liquidity trades to lure the attacking bots. An expert hired by the defense mentioned in court documents that one bot invested nearly $5 million to sandwich a Peraire-Bueno brothers' trade worth less than $700.

Prosecutors also pointed out that the brothers discovered a vulnerability in the MEV Boost code. MEV Boost is open-source software mainly used by Ethereum network operators. The prosecution claims that, using this vulnerability, the Peraire-Bueno brothers could view the full contents of proposed blocks and reorder them for personal gain—essentially selling the low-liquidity cryptocurrencies just after the sandwich attack bots bought them.

"The brothers essentially tricked the bots into conducting what should have been a safe sandwich attack according to network rules," said Matt Cutler, CEO of blockchain infrastructure company Blocknative Corp. "But because of this vulnerability, the attack was not safe."

The defense, on the other hand, argues that the companies conducting sandwich attacks voluntarily completed the trades and the ownership of funds had already transferred.

Beating the Bots: Elite Tech-Backed Methods

Prosecutors claim the brothers learned the technical skills needed for the alleged fraud at "one of America's most prestigious universities." Anton graduated from MIT in 2024 with a bachelor's degree in computer science and engineering; a few years earlier, James earned undergraduate and master's degrees in aerospace engineering from the same school. An MIT spokesperson declined to comment on the case.

Prosecutors are trying to frame the case as a straightforward theft, guiding the jury to focus on the brothers' actions. To prove criminal intent, the prosecution plans to point out that Anton once searched online for "which is worse, jail or prison" and "where do criminals usually hide money." The most serious fraud charge the brothers face carries a maximum sentence of 20 years in prison.

Before the trial, prosecutors said they hoped to minimize discussion of sandwich trading. They asked U.S. District Judge Jessica Clarke to bar the brothers from submitting expert testimony about sandwich trading, claiming that "in any case, their actions constitute fraud" and that "excessive discussion of sandwich attacks could bias the jury against the prosecution's victims."

Last week, Clarke ruled that the Peraire-Bueno brothers could have most of their experts testify, provided they do not blame the victims.

This could be a subtle line to walk, as the brothers hope to explain their actions within what their lawyers call a "high-risk adversarial context." In a recent court filing, they refuted the prosecution's allegations of criminal intent:

"A person who tries to thwart a sandwich attack, using the attacker's own methods to beat MEV bots, has reason to believe they did nothing wrong," the Peraire-Bueno brothers wrote in the document.

A Highly Secretive World

Within the crypto community, some who believe the charges against the Peraire-Bueno brothers are justified also admit to having doubts about sandwich attacks.

"Even if you think MEV searchers (i.e., sandwich attackers) are bad actors, that doesn't mean stealing their money is justified," Ethereum Foundation researcher Dankrad Feist wrote on X in May 2024. "Stealing from a thief is still theft."

Feist said on Tuesday that his view on the case has not changed since his post.

A report cited by both the prosecution and defense shows that 75% of sandwich attacks can be traced to just 20 accounts, but little is known about these accounts.

Savannah Technologies and Yakira are also very low-profile. According to Yakira's LinkedIn profile, he graduated from the Hebrew University of Jerusalem in 2015, then pursued a PhD in cryptography at the Technion – Israel Institute of Technology; from 2017 to 2020, he served as Head of Research at Israeli crypto company Orbs.

Currently, the identities of the traders involved in the "theft of $12 million from other traders" allegedly committed by the Peraire-Bueno brothers remain unknown.

"MEV is a highly secretive world," Cutler recalled, referencing crypto conferences where "traders wore motorcycle helmets to conceal their identities." He said, "It will be interesting to see how the judge and jury handle the complex issues related to MEV in this case."

"At the very least, I will be closely following the trial to see what depth of consideration the court will show when thinking about future precedents," he said.