After nearly four weeks of trial and three days of deliberation, a federal jury in New York could not reach a unanimous verdict, and over the prosecution’s objection, the judge declared a mistrial. That conclusion was a significant victory for Fick & Marx client, Anton Peraire-Bueno, and his brother, James Peraire-Bueno, who were both accused of committing wire fraud and other crimes in connection with multimillion-dollar trades on the Ethereum cryptocurrency network.
When the former U.S. Attorney for the Southern District of New York announced fraud charges against Anton and James Peraire-Bueno, brothers who graduated from MIT and started a successful crypto trading firm, he called the charges “novel.” Indeed, the government was never able to point to any precedent for its misguided prosecution.
The transactions at issue involved swaps of various cryptocurrencies in liquidity pools on the Ethereum network, a decentralized financial platform with no central regulator and no trusted intermediaries. Using publicly available information, the Peraire-Buenos developed an innovative trading strategy to thwart “sandwich attacks,” predatory trades by automated bots that profit at the expensive of unsophisticated users. Although the Peraire-Buenos realized significant profits, they did not commit any fraud or steal any tokens. They neither hacked any computer system nor undermined the integrity of the blockchain, as the government mistakenly asserted.
While there is room for reasonable debate about how best to regulate novel financial technologies, like crypto, it is clear that the Department of Justice should not seek to impose unprecedented rules through criminal prosecution. Prosecutors are tasked with enforcing existing laws, not writing new ones, especially when they do not understand the complicated and rapidly evolving technologies at issue.
The case has received extensive media coverage, including in the financial, legal, and crypto communities. The Washington Post, NY Post, and BBC reported on the initial charges, and Bloomberg and Reuters also reported on the eventual mistrial.
The Peraire-Buenos have asked the judge to dismiss all charges, which the evidence at trial did not support, rather than hold another trial.