During a court proceeding in New York City, a former associate testified that two brothers, both graduates of MIT, devised a strategy to illicitly gain millions from cryptocurrency investors by exploiting a vulnerability in the system.
The witness, Travis Chen, formerly worked for 18decimal, a trading company associated with Anton and James Peraire-Bueno.
Chen stated that the brothers dedicated several months to studying market activities and experimenting with ways to misuse a specific aspect of Ethereum’s
Did you know?
Subscribe – We publish new crypto explainer videos every week!
What is an Automated Market Maker in Crypto? (Animated)
Chen’s testimony was part of an agreement with prosecutors granting him immunity from prosecution, contingent on returning $2.4 million derived from the fraudulent activity.
The plan involved creating deceptive transactions to lure in automated trading programs, also known as “sandwich bots”. These bots are programmed to capitalize on price differences created by other traders.
During a meeting in December of 2022, Chen recalled seeing documentation projecting profits that could exceed $6 million, assuming all targets were successfully exploited.
The strategy was put into action in April of 2023, resulting in an estimated $25 million gain within a short time period.
Flashbots, the entity overseeing MEV-Boost, promptly addressed the weakness in their system. Robert Miller, a Flashbots developer, also provided testimony.
Miller reported being contacted anonymously by someone offering details on similar methods, on the condition that the initial situation not be labeled as an “exploit.” Miller complied with this request.
In related news, an individual involved in the kidnapping of Aiden Pleterski, self-proclaimed “Crypto King”, pleaded guilty. Want to know more about the crypto king kidnapping?
Read the full story.