Inside the MIT Crypto Heist That Left a Jury Divided

At 7 p.m. on Friday evening, November 7, in Manhattan, the jury filed a final note to the judge. They had tried for three days, they said. There were tears in the room, sleepless nights, and still no agreement. When Judge Jessica Clarke read the note aloud, the brothers sitting at the defense table — James and Anton Peraire-Bueno — exhaled softly. Four weeks of trial had ended in a hung jury. For now, they were free.

The two were not ordinary defendants. Both trained at MIT. Both had spent years studying how digital systems worked; how to make them move faster, and more securely. But in April 2023, their knowledge turned them into the subjects of one of the most unusual fraud cases in American history.

According to federal prosecutors, the brothers had found a way to bend the Ethereum blockchain to their will. They didn’t hack passwords or break into accounts. They wrote code that let them see other people’s crypto trades before they were finalized, and then reorder the transactions in their favor. In twelve seconds, they made off with twenty-five million dollars.

To the government, it was theft. This was nothing more than high-tech sleight of hand dressed up as innovation. To the brothers’ defense team, it was simply a brilliant use of the system’s own rules, not a violation of them. They hadn’t deceived anyone, the lawyers argued. They had simply written better code.

When the verdict finally broke down, the courtroom fell quiet. The case had turned into a question far larger than two men and a pot of digital gold: where does the law end, and code begin?

The jury’s note that night was weary and emotional. Half of its twelve members had broken down in tears the day before. Some said they hadn’t slept in nights. One male juror later admitted they were not struggling over the facts, but over how to apply the law. “It was understanding the law,” he told a prosecutor quietly after the mistrial was declared. “Finding the appropriate standard was a struggle for us.”

It had been a four-week marathon inside Judge Clarke’s Manhattan courtroom. The brothers faced charges of wire fraud, conspiracy, and money laundering — each carrying a possible twenty-year sentence. Jurors had to decide whether their twelve-second code trick counted as deception or strategy.

The government said it was fraud, pure and simple. Prosecutors described the act as a “first-of-its-kind” blockchain heist, but insisted it was no different from any other financial scam. “There is no separate law about fraud on the blockchain,” said Assistant U.S. Attorney Danielle Marie Kudla during closing arguments. “Whether online or on Ethereum, you can’t tell a lie and deceive people to get their money.”

The defense saw it differently. They compared the Ethereum network to a high-speed arena where automated bots compete for advantage. The brothers, they said, were programmers who had outsmarted their rivals in a fair digital battle. Their bots had detected a flaw in the system, exploited it within the rules, and moved faster than anyone else. “They took on risk and enjoyed tremendous success,” said defense lawyer Daniel Nathan Marx. “They should be celebrated, not villainized.”

When the jury failed to agree, it wasn’t only the brothers who felt relief. Around the courtroom, lawyers smiled in disbelief.

The brothers’ case was not an isolated episode. It marked the third major setback this year for U.S. prosecutors trying to police digital asset fraud. In May, a Manhattan judge overturned a conviction against Avraham “Avi” Eisenberg, accused of siphoning one hundred and ten million dollars through a market manipulation scheme. In August, another jury failed to reach a verdict in the Tornado Cash case involving a billion dollars in laundered crypto.

The Department of Justice had counted on the Peraire-Bueno case to set a precedent. It would prove, they hoped, that even in decentralized systems, deception could not hide behind lines of code. Instead, it became a symbol of how difficult it is to draw that line at all.

Ethereum’s defenders have long described it as a “trustless” system — one that relies on algorithms, not institutions, to enforce fairness. But that trustlessness depends on shared assumptions. When someone exploits a loophole others didn’t see, is it innovation or deceit?

In their pre-trial filings, the defense called the indictment an “audacious attempt” to regulate the inner workings of Ethereum. The network, they argued, was designed to be self-correcting. It punishes bad behavior through consensus, not criminal law. For the government to step in was to misunderstand the nature of the system itself.

By Friday evening, that philosophical clash had exhausted everyone in the room. The jury foreperson’s note said they were unanimous about one thing: they could not make progress. Judge Clarke looked at the lawyers, sighed, and declared a mistrial. There was no applause, no outburst. The gavel came down with a quiet finality.

The brothers walked out of the courthouse under the same November sky that had hung over the first day of their trial. Their futures remained uncertain. The Department of Justice could still retry them. But for now, after twelve seconds of code and four weeks of courtroom strain, they were free to go home.

Somewhere in the crowded world of Ethereum, millions of transactions continued to move every second. The blockchain carried on, indifferent to verdicts or moral debates.

In that silence, a question lingered: if code is law, who decides what’s a crime?