US DOJ Arrests & Charges 2 brothers for Conspiracy, Wire Fraud, & Money Laundering in Relation to MEV exploit in April 2023

Full Indictment: https://www.justice.gov/opa/media/1351996/dl

Coindesk article: https://www.coindesk.com/policy/2024/05/15/brothers-accused-of-25m-ethereum-exploit-as-us-reveals-fraud-charges/

Summary - 2 brothers executed an exploit of the MEV relay system in April 2023 to gain roughly $25M in stablecoins. They began planning in December 2022 and setup 16 validators in early 2023 to execute their plan. They performed test transactions to see which type of proposed transactions in the mempool would get MEV Bots to include their transactions in proposed block bundles, and built their exploit plan from there. Once one of their active validators was selected for a block proposal, they submitted bait transactions for the MEV Bots to attempt to sandwich (front run the bait trade and then immediately sell afterward for a profit). The MEV Bots included all 8 bait transactions in the proposed bundles to the builder, which then requested the valid digital signature from the validator before it would release the full block proposal with details of the transactions. The brothers provided a false signature to the relay, which tricked the relay into releasing the full transaction details, which the validator then rearranged and changed the coding of the MEV bots trades to reverse the sandwich attack with the brothers now effectively front running the MEV Bots proposed trades and receiving their $25M in stablecoins. The victim(s) or Ethereum discovered the exploit and contacted the brothers to try to get them to return the funds between April to June 2023, but the brothers elected instead to attempt to launder the funds and keep the money.