Margaux Nijkerk reports on the Ethereum protocol and L2s. A graduate of Johns Hopkins and Emory universities, she has a masters in International Affairs & Economics. She holds a small amount of ETH and other altcoins.
In late 2022, the brothers Peraire-Bueno – twenty-something graduates of a prestigious university who had turned their sights on blockchain – embarked on an effort that ultimately netted them $25 million, in one of the most sophisticated exploits in a decade or so of frequent crypto exploits. At the outset, according to U.S. prosecutors, they outlined a four-step plan.
"Tampering with these established MEV-Boost proposals, which are relied upon by the vast majority of Ethereum users, threatens the stability and integrity of the Ethereum blockchain for all network participants," according to the indictment.On Ethereum, users submit transactions that are added to a"mempool” – an area where transactions are in a holding pattern.
When the searchers bundle transactions together, they have a target transaction, a signed transaction before it, and a signed transaction after. “Because the honeypot transactions were very lucrative, and the bots didn't have checks in place to prevent certain conditions from happening, and they fundamentally trusted the integrity of the validator and MEV-boost ecosystem, the malicious validator got access to signed transactions that were secured and they were then able to manipulate those signed transactions to drain the bots of $25 million of funds,” Cutler said.
Based on their research and planning, the prosecutors alleged, the brothers"knew that the information contained in the false signature was designed to, and did, trick the Relay to prematurely release the full content of the proposed block to the defendants, including the private transaction information," according to the indictment.“Just because your car door is unlocked, doesn't mean it's okay to break into your car, right?” he said.
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