Two brothers, both recent Massachusetts Institute of Technology graduates, are going on trial this week in a case that promises to shed light on a secretive and controversial cryptocurrency trading strategy.
James and Anton Peraire-Bueno are accused of stealing around US$25 million (814.7 million baht) from traders on the Ethereum blockchain engaged in so-called sandwich attacks. The brothers, who have pleaded not guilty, argue their conduct was fair game in an unregulated area of the market, and that their alleged victims were doing something similar.
The case has divided the crypto community. Many are hoping the Manhattan federal court trial, which began with opening arguments Wednesday, will help clarify the rules of the road for what are known as Maximal Extractable Value (MEV) strategies.
MEV involves reordering, excluding or including transactions before they are posted to the blockchain.
“The idea that it was criminal honestly didn’t even occur to me,” Evan Van Ness, chief investment officer of crypto trading firm TXPool Capital, said of the case against the brothers. “If people think crypto is the Wild West, MEV is the Wild West of crypto.”
Though some forms of MEV are seen as making crypto markets more efficient, sandwich attacks like those undertaken by the Peraire-Buenos’ alleged victims are controversial. Attackers use bots to place front- and back-run trades around another user’s transaction. The attacker profits by immediately selling after driving up the price at the expense of the sandwiched users. Some regard sandwiching as a form of market manipulation, though it is not illegal.
Firms that deploy sandwich attacks typically operate in secret, often going to great lengths to conceal their identities. But one will emerge at the Peraire-Buenos’ trial. The brothers’ main alleged victim was recently identified in court filings as Savannah Technologies, a little-known Israeli firm. Its chief executive officer, David Yakira, is expected to testify for the prosecution about how Savannah lost $13 million when the brothers targeted the firm’s bots.
In court Wednesday, lawyers for the brothers, who declined to comment for this story, said the Peraire-Buenos had done nothing more than figure out an aggressive but “wildly successful” strategy. They characterised the losses suffered by “sandwich bots” as the breaks of the game in the “fast-changing, rough-and-tumble” world of crypto trading.
Savannah “cried fraud but that doesn’t make it true”, defence lawyer William Fick told jurors, “and the fact that these prosecutors have chosen to side with Savannah does not mean Anton and James did anything wrong”. A lawyer for Savannah and Mr Yakira declined to comment for this story.
In openings for the government, Assistant US Attorney Ryan Nees, sought to focus jurors solely on the brothers’ conduct, saying the Peraire-Buenos committed a “high-speed bait and switch” and that their “goal was to rip people off”.
Prosecutors didn’t respond to requests for comment for this story.
According to the indictment, James, 29, and Anton, 25, studied the trading behaviour of sandwichers and developed a plan to bait them. The sandwiching firms program bots to sniff out profitable transactions among those pending on the blockchain. The most attractive targets are usually trades of large size or that involve tokens with low liquidity.
The brothers allegedly carried out their plan in April 2023, setting out a number of small illiquid transactions to attract the bots. An expert hired by the defence said in a court filing that one bot spent nearly $5 million trying to sandwich a trade by the Peraire-Buenos that was worth less than $700.
The brothers also allegedly managed to find a vulnerability in the computer code for MEV Boost, an open-source software used mainly by Ethereum network operators. With this “exploit,” the Peraire-Buenos were able to access the full content of a proposed block and reorder it to their advantage, essentially selling the illiquid cryptocurrencies the sandwich bots had just purchased out from under them, according to prosecutors.
The Peraire-Buenos basically “tricked someone into doing a sandwich that should’ve been safe by the rules of the network”, said Matt Cutler, CEO of Blocknative Corp, a blockchain infrastructure company. “But because there was this bug, it was unsafe.”
The defence contends that the sandwiching firms had already “voluntarily traded away” their funds at that point.
The brothers learned the technical skills to pull off the alleged scheme “at one of the most prestigious universities in the country”, prosecutors said. Anton graduated from MIT with a bachelor’s degree in computer science and engineering in 2024, while James obtained undergraduate and master’s degrees in aerospace engineering and aeronautics a few years earlier. A spokesman for MIT declined to comment on the case.
Prosecutors are trying to cast the case as a straightforward theft. To show their criminal intent, the government hopes to point out that Anton allegedly asked in a web search whether “prison or jail worse” and “where do criminals keep dollars”. The most serious fraud charge against them carries a maximum penalty of 20 years in prison.
Ahead of the trial, the government indicated it wanted to minimise mentions of sandwich trading. They asked US District Judge Jessica Clarke to block the brothers from presenting expert testimony about the practice, claiming their actions amounted to fraud regardless, and that dwelling on sandwiching could prejudice the jury against the alleged victims.
Ms Clarke ruled last week the Peraire-Buenos can put most of their experts on the stand as long as they don’t “blame the victim”. After opening on Wednesday, prosecutors complained to Ms Clarke, outside the presence of the jury, that the defence appeared to be “arguing victim-blaming from start to finish”.
Defence lawyers are certainly walking a fine line. In a recent court filing, they pushed back on the government’s allegations of wrongful intent.
“It is reasonable for an individual who attempted to thwart a sandwich attack and beat the MEV Bots at their own game to believe he is doing nothing wrong,” the Peraire-Buenos said.
Some in the crypto community who believe the Peraire-Buenos were properly charged also acknowledge qualms about sandwiching.
“Even if you consider MEV searchers as bad actors, it would not make it ok to steal from them,” Dankrad Feist, an Ethereum Foundation researcher, wrote on X in May 2024. “Stealing from a thief is still theft.”
Mr Feist said Tuesday his views about the case haven’t changed since that post.
According to a report cited by both the prosecution and defence, 75% of sandwich attacks can be traced to just 20 accounts, though little is known about them.
Savannah and Mr Yakira likewise have low public profiles. According to his LinkedIn page, Mr Yakira graduated from Hebrew University of Jerusalem in 2015 and later researched cryptography as a PhD candidate at Technion — Israel Institute of Technology. He was head of research at Orbs, an Israeli crypto company, from 2017 to 2020.
The identities of the traders from whom the Peraire-Buenos allegedly stole the other $12 million remain unknown.
“MEV is a very secretive world,” Mr Cutler said, recalling crypto conferences where traders wore motorcycle helmets to conceal their identities. He said it will be interesting to see how the judge and jury wrestle with the complex issues around MEV at the Peraire-Buenos’ trial.
“I, for one, am going to be watching this to see how thoughtful the court will be as it considers future precedent,”. ©2025 Bloomberg
Miles J Herszenhorn is a reporter covering legal affairs at Bloomberg News.
