Ethereum Blockchain Exploitation and Fraud Charges

Evan Zinaman breaks down why the government’s indictment of the Bueno brothers for their $25 million MEV exploitation is a “vanilla fraud,” but still may shed light on potential compliance considerations for block-building participants.

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In this episode, Evan Zinaman, founder and principal at Trailbreak, delves into the first-of-its-kind case of the Bueno brothers, who face Department of Justice charges for exploiting Maximal Extractable Value (MEV) in a cryptocurrency scheme. Accused of manipulating transaction ordering to create an arbitrage opportunity, the brothers are charged with conspiracy to commit wire fraud as well as wire fraud itself. 

Zinaman explores the broader implications of MEV exploitation and addresses critics who say that the MEV exploiters just got a taste of their own medicine, and the need for block-building participants to consider their legal and compliance responsibilities.

Show highlights:

• What the charges against the Bueno brothers are about
• How block building works on Ethereum and how the relay was manipulated by the Bueno brothers
• The different types of MEV and which ones are acceptable 
• Why these charges could be seen as a "vanilla fraud," according to Evan
• Whether the benefits of MEV outweigh the cons of it
• The lack of terms of service in the MEV space
• How the regulators' attention to the space has changed over time
• 
  

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Guest | 

• Evan Zinaman, Founder & Principal at Trailbreak
• Where the Rubber Meets the Road: A MEV-Aware, Functionalist Review of OFAC Risk "on the Base Layer"

Links | 

• Previous coverage on Unchained of MEV:
• Why MEV Will Always Be Controversial
• The Chopping Block: Why the Once-Taboo MEV Is Now a Core Part of Ethereum
• The Mango Markets Attacker on Whether His 'Trade' Was Ethical or Not
• The Chopping Block: ‘Code Is Law’ Is ‘Obviously Not How Anything Works Ever’

The Case:

• Unchained: DOJ Alleges Two Brothers Stole $25 Million From MEV Bots Last Year

Research:

• Blockchain Transaction Ordering as Market Manipulation by Mikolaj et al

Learn more: 

• What Are Sandwich Attacks in Crypto? A Beginner's Guide
• What Is MEV in Crypto?

Unchained Podcast is Produced by Laura Shin Media, LLC.  Distributed by CoinDesk. Senior Producer is Michele Musso and Executive Producer is Jared Schwartz. 

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