One Brotherly Heist 🫂💰
First ever US criminal case related to MEV in just 12 seconds. FCA wants crypto to clean the market. What's up with GameStop? Gill is still online. El Salvador is still mining. Millennium bets big.
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The two brothers traversed a path no one had ever walked.
That marked the first ever US criminal case related to MEV in just 12 seconds.
The Accused
Anton Pepaire-Bueno, 24 (Boston)
James Pepaire-Bueno, 28 (New York)
Allegation: Stole $25 million worth of crypto.
Arrested for the charges: Conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering.
Before this gets interesting, what is MEV boost?
MEV Boost is a tool designed to address some of the challenges around MEV (Maximal Extractable Value) in Ethereum's PoS system.
Transactions go through a "mempool" before being added to the blockchain and MEV-Boost lets builders create blocks from these transactions.
Traditionally, miners (now validators in PoS) both proposed new blocks and decided which transactions to include. MEV Boost separates these roles.
Here’s all the roles
MEV Boost creates a marketplace where validators can choose blocks submitted by different builders.
The Exploit
The brothers found a bug in MEV-Boost that allowed them to see the contents of blocks before they were finalised.
They created fake validators and targeted specific traders who used MEV bots.
They used "bait transactions" to understand the bots' trading strategies.
Then, they lured the bots to one of their validators processing a new block.
By seeing the block content early, they could:
Frontrun the bots: Execute their own trades before the bots, manipulating the market price.
Tamper with the block: Replace "bait transactions" with their own, where they sold illiquid cryptocurrencies at inflated prices to the bots.
This tricked the bots into buying these worthless crypto, draining their liquidity pools.
The brothers then allegedly laundered the stolen funds through various transactions.
The stolen funds were reportedly funneled through shell companies (rejected requests to return) and foreign exchanges in an attempt to cover their tracks.
The brothers, described as highly educated, face a tough road ahead. The charges carry a potential 20-year prison sentence.
First of its kind, this case could set a precedent for future crypto-related crimes.
Here’s another duo
Self-proclaimed "Crypto King" Aiden Pleterski and his associate, 27-year-old Colin Murphy
They have been arrested in Canada facing charges of fraud and money laundering
The Allegations: Pleterski and his company swindled investors out of roughly $40 million CAD (around $30 million USD) between 2021 and 2022.
Luxurious Lifestyle: Court documents allege Pleterski spent millions on himself - luxury cars, international travel, and a lavish mansion.
Bankruptcy and Investigations: A bankruptcy case revealed minimal investments and extravagant spending, leading to a 16-month investigation dubbed "Project Swan."
Alleged Kidnapping: Pleterski was reportedly kidnapped and tortured by some of his alleged victims in December 2022. Four individuals have been charged with the kidnapping.
The Aftermath: Pleterski was released on bail with strict conditions, including surrendering his passport and refraining from crypto activity or financial social media posts.
Blockchain security platform CertiK reported that victims of crypto hacks, exploits and scams had lost roughly $25 million in April — its lowest monthly figure since 2021. The platform reported roughly $1 billion in crypto lost to illicit actors in 2023.
Block That Quote 🎙️
Financial Conduct Authority (UK) director, Matthew Long.
“Let’s get a clean market first, and then let’s talk about things like using stablecoins for payments”
Long is urging crypto firms to step up and fight money laundering within the crypto industry.
“I still see £24 billion of money laundering in crypto transactions, and that’s a low estimate.”
This stance clashes with some politicians who see the FCA's regulations as stifling innovation. Economic Secretary Bim Afolami fears the FCA might be "undermining" the entrepreneurial spirit of the crypto industry.
Supporting this argument
Only 4 crypto firms received FCA approval in 2023, with weak AML practices cited as a major reason.
The FCA's crackdown has impacted crypto ATMs and marketing, leading companies like Binance and PayPal to pause operations in the UK.
GameStop Updates
Is GameStop (GME) taking a nosedive after a wild ride?
The Wild Ride
GME briefly reached $64.83, a near 4x increase from the previous week's close: Is The Dumb Money Back? 💸
The Nosedive
The GME stock price plummeted 30% in Wednesday's opening minutes, sinking to $34.12 (39 atm) This wipes out a significant chunk of the gains sparked by the mysterious return of meme stock influencer Roaring Kitty (aka Keith Gill) over the weekend.
Bitcoin and Dogecoin See Gains
While the GameStop rally cools, Dogecoin surged 7% and Bitcoin? on fire. Reached its highest price in three weeks at over $66K. This follows a report showing inflation dipped slightly in April. Large investments in new Bitcoin ETFs are also fueling the rise.
Cramer Throws Shade
CNBC's Jim Cramer is urging investors to dump GameStop and AMC, fueled by the media hype.
"When I see meme stock mania taking over again, led by GameStop and AMC, I need to remind you that this is irrational," he said. "There's no way these stocks should reach such elevated levels on their own."
Roaring Kitty Keeps Posting
Keith Gill’s still on it, posting interesting clips, like this one:
While his tweets skip any direct mention of GameStop, they're filled with movie memes.
Referencing Thanos from Avengers and Wolverine's adamantium claws, Kitty seems to be asserting control, ready to make his mark?
Well, who wants to decode his tweets? write in the comment box.
In the Numbers 🔢
$1.94 billion
Hedge fund giant Millennium Management’s massive Bitcoin ETF holdings in Q1 2024.
Millennium's holdings are spread across five different Bitcoin ETFs.
BlackRock's Bitcoin ETF is their biggest bet - $844 million invested. Fidelity's fund follows - $806 million.
ARK 21Shares Bitcoin ETF (ARKB), Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trust (GBTC) holds the rest.
This news paints Millennium as the undisputed king of Bitcoin ETF holders, with a massive 200x more exposure than the average top-500 ETF holder.
Industry folks are happy and so is Bitcoin (at $66K).
Institutional investors are embracing Bitcoin through spot Bitcoin ETFs.
What’s Matt Hougan, from Bitwise saying?
El Salvador Heats Up Bitcoin Mining
The Central American nation has reportedly mined 474 bitcoin since 2021 using geothermal energy from the Tecapa volcano.
El Salvador is harnessing clean, geothermal energy to power its Bitcoin mining operations.
President Nayib Bukele, a Bitcoin advocate, recently added 300 new processors to ramp up mining efforts.
The newly mined coins bring El Salvador's total Bitcoin stash to 5,750, currently valued at around $380 million.
Despite the increase in mining power, Bitcoin mining uses only a tiny fraction (1.47%) of El Salvador's total power generation capacity (102 megawatts).
While the government is enthusiastic, widespread adoption of Bitcoin as legal tender in El Salvador remains low.
The Surfer 🏄
Binance Developed an algorithm to detect millions of spoofed addresses (13.4M on BNB, 1.68M on Ethereum). It alerts users before sending funds to scammers. Binance partnered with HashDit to share the data and protect the wider crypto industry. This comes after a recent $68M exploit where a user lost funds to a spoofed address.
Vanguard's new CEO Salim Ramji says Bitcoin ETFs don't align with Vanguard's investment philosophy. He cites consistency and views crypto as speculative. This comes despite Ramji overseeing a successful Bitcoin ETF launch at his previous firm.
UN report reveals North Korea used Tornado Cash to launder stolen crypto. Funds ($147.5 million) originated from a hack on the HTX exchange in late 2023.
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