quote:
If convicted of the conspiracy, wire fraud, and money laundering charges against them, the brothers — both highly educated in math and computer sciences — face a maximum sentence of 20 years in prison for each count.

Prosecutors-

quote:
The brothers, prosecutors allege, used "bait transactions" to find three victim traders and study their trading habits.

They then "lured" the victims' trading bots into a carefully set, fast-acting trap.

The trap was set with an irresistible bundle of crypto trades — the kind of transactions that the brothers correctly guessed the victim's bots would leap at the chance to profit from, prosecutors say.

The brothers then sprung the trap shut. Prosecutors say they exploited a software "vulnerability" that let them quickly glimpse their prey's private transaction information and "tamper" with the purchase in a classic bait-and-switch. Instead of generating an anticipated windfall, the victims found that their $25 million had purchased a pile of effectively worthless, illiquid junk crypto.

The heist itself, prosecutors say, was executed in just 12 seconds — the brief pause between the moment a crypto trade is made and when it is officially logged on the blockchain.

Defense-

quote:
"And there's no government regulations. Instead, economic incentives guide parties' behavior," Looby argued. Prosecutors, he said, are alleging conduct that the government has never sought to criminalize, he argued, including taking advantage of a software vulnerability or using a crypto transaction as "bait."

For fraud, "there needs to be a promise to the victim," he also argued.

"Here, there is no alleged communication at all between the Peraire-Buenos and the traders. And for that reason as well, there's no alleged intent to defraud," he told the judge.

The so-called victims "made very risky bets on a strategy that didn't pay out," he added. "But there was nothing stolen and there was no theft, as that word would normally be used."

The alleged victims lost their cryptocurrency "through pre-programmed trades without ever interacting with the Peraire-Buenos, directly or indirectly," the defense attorneys argued earlier this year, in a failed motion to dismiss the indictment.

"Before this indictment, no Ethereum user would have understood that thwarting a predatory attempt by 'bots' engaged in market manipulation could lead to criminal charges," they wrote.

"No court has ever applied these statutes to similar transactions," they argued. "And the Peraire-Buenos had no reason to know that their alleged conduct may be considered unlawful."

Trial starts Tuesday

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Posted by UltimaParadox

North Carolina

Member since Nov 2008

52137 posts

Posted on 10/13/25 at 11:49 am to TigerintheNO

Of course it's fraud... But in crypto that's a feature not a bug. The deregulation had been fast since the be administration took over, and they will turn a blind eye to any crypto fraud. They have been dropping cases left and right.

So yes what they did is fraud, but in the current legal environment it is not illegal

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Posted by chryso

Baton Rouge

Member since Jul 2008

13582 posts

Posted on 10/13/25 at 11:49 am to TigerintheNO

So beating the bots is a crime?

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Posted by Bard

Definitely NOT an admin

Member since Oct 2008

58418 posts

Posted on 10/13/25 at 11:55 am to TigerintheNO

If the intent was to defraud, then it's fraud (and that looks like the case).

Still, I can't stand bot traders so if the "victims" were rewarded with just a symbolic dollar, it wouldn't hurt my feelings.

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Posted by Joshjrn

Baton Rouge

Member since Dec 2008

32047 posts

Posted on 10/13/25 at 11:55 am to TigerintheNO

There have been a string of federal wire fraud cases lately, as it’s a woefully outdated statute that now encompasses an absurd amount of behavior. A recent scotus oral argument opined over a babysitter who lies about her “credentials” potentially being prosecuted under federal wire fraud statutes.

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Posted by LSURussian

Member since Feb 2005

134057 posts

Posted on 10/13/25 at 12:25 pm to TigerintheNO