A gavel and a block is pictured at the George Glazer Gallery antique store in this illustration picture taken in Manhattan, New York City, U.S., August 18, 2020. REUTERS/Andrew Kelly/Illustration

By Nate Raymond

(Reuters) -A federal judge on Friday declared a mistrial in the case of two Massachusetts Institute of Technology-educated brothers charged with carrying out a novel scheme to steal $25 million worth of cryptocurrency in 12 seconds that prosecutors said exploited the Ethereum blockchain's integrity.

U.S. District Judge Jessica Clarke in Manhattan sent jurors home after they were unable to reach agreement on whether to convict or acquit Anton Peraire-Bueno and James Peraire-Bueno of charges that they carried out a first-of-its-kind wire fraud and money laundering scheme.

The mistrial was confirmed by William Fick, a lawyer for Anton Peraire-Bueno at Fick & Marx. A spokesperson for Manhattan U.S. Attorney Jay Clayton did not respond to a request for comment.

Both brothers attended Cambridge, Massachusetts-based MIT, where prosecutors say they studied computer science and developed the skills they relied on for their trading strategy.

They were indicted in May 2024, before President Donald Trump's administration came into office, ushering in a new, crypto-friendly approach to enforcement. Despite the shift in priorities, the case against the brothers proceeded to trial.

Assistant U.S. Attorney Ryan Nees in his opening statement on October 15 accused the brothers of carrying out a "high-speed bait-and-switch" designed to lure trading bots into a trap and drain the accounts of other cryptocurrency traders.

Prosecutors said that for months, the Peraire-Bueno brothers plotted to manipulate and tamper with the protocols used to validate transactions for inclusion on the Ethereum blockchain, a public ledger that records each cryptocurrency transaction.

They did so by exploiting a vulnerability in the code of software called MEV-boost that is used by most Ethereum network "validators," who are responsible for checking that new transactions are valid before they are added to the blockchain, prosecutors said.

"Then they planted a trade that looked like one thing from the outside, but was secretly something else," Nees told jurors in his opening statement. "Then, just as the defendants planned, the victims took the bait."

Katherine Trefz, a lawyer for James Peraire-Bueno at Williams & Connolly, countered that the trading strategy they executed was not just novel but legitimate and "consistent with the principles at play in this very competitive trading environment."

(Reporting by Nate Raymond in Boston; editing by Diane Craft)