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“In the courtroom, the facts are often less important than how the story is told.”
— Alan Dershowitz
Any moment now, 12 jurors in the Southern District of New York will tell us whether blockchain code is law in America.
Anton and James Peraire-Bueno were arrested in May of last year on accusations of “stealing” $25 million in ETH by exploiting Ethereum’s intricate system of building blocks.
Closing arguments in their trial ended yesterday.
Southern District prosecutors told the court the Peraire-Bueno brothers used “tricks and deception” to execute a “bait and switch” exploit that lured a group of lovable, unsuspecting MEV sandwich bots into being sandwiched themselves.
The defense says the brothers were simply playing by Ethereum’s rules: “This is like stealing a base in baseball,” they told the jury.
Technically, the jury will return a verdict on charges of wire fraud and money laundering. But both sides have framed the case as a judgment on whether code is law in the world of decentralized blockchains.
Coin Center persuasively argues that it should be: “Validators compete under a mathematically explicit and self-executing rule set,” it wrote in an amicus brief. “Those rules alone define both the boundaries of permissible conduct and the penalties for deviation.”
The prosecution fundamentally disagrees: “Just because something is possible doesn’t make it legal,” they told the court.
Both sides did their best to translate the arcane art of Ethereum block-building into something a jury could follow well enough to pass judgment on the defendants’ actions.
The defense thinks that’s to their advantage: “If you understand how Ethereum works,” they told the jury, “Anton and James are innocent.”
But anyone who’s read Presumed Innocent or watched 12 Angry Men will know that nothing as complicated as Ethereum should be decided by a jury of normal people.
As recorded by Inner City Press, defense attorney Katherine Trefz tried to make Ethereum block-building relatable to jurors with a cooking analogy:
That’s a pretty good start, for sure, and probably good tactics.
As a defendant, I’m not sure I’d want my actions judged with food analogies, but what’s the alternative?
In a case this bewilderingly technical, the best that lawyers can probably do is tell a story.
An expert witness asked to explain MEV arbitrage also resorted to analogy, again with food:
Next time you trade on Ethereum, remember: You’re the salami.
Cleverly, the prosecution tried to make the food analogies less appetizing:
“Salmonella” is a kind of “poisoned” crypto token used to trap sandwich bots on Ethereum, so a mini-trial might have helped the jury understand the larger trap the defendants had set.
Some highly technical things were explained; some pretty obvious things were not:
Anyone who needs a definition of “bot” would presumably need one for “atomic arbitrage,” too; but the defense quickly moved on.
Judge Jessica Clarke seemed similarly eager to move on from technical details:
There were a lot of breaks — way more than in the movies.
More importantly, there was much technical substance in between.
The prosecution seemed to recognize that in their closing argument, which resorted once again to analogy: “If you go overweight with your bag on Jet Blue, you pay a penalty, you don’t go to jail. That’s not the way rules work in our world.”
I don’t know what that means — is Jet Blue Ethereum? Are the defendants passengers? Who’s flying the plane? Block-builders?
Hopefully someone on the jury puzzled it out, because there’s a lot riding on the outcome of The United States of America v. Anton Peraire-Bueno and James Peraire-Bueno — for crypto as well as for the defendants.
For crypto, a guilty verdict would make it look like Ethereum’s code is so unable to keep things orderly that it needs the US courts to come in and police what happens on its network.
Or, since we’re doing analogies: like a kid on a playground who needs his big brother to keep him safe from bullies.
In this case, literally Big Brother: The plaintiff here is not the MEV sandwicher who got sandwiched, but the United States of America.
More importantly, a guilty verdict would likely mean many years in prison for the two defendants.
“This is a hugely consequential decision in the lives of two young men,” the defense concluded. “Not guilty. Thank you.”
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