Is Ethereum completely illegal? New York prosecutors charge "MEV Bots crime": Nodes should uphold a duty of integrity, arranging transactions constitutes fraudulent money laundering.

A New York court is hearing the MEV theft case, with the prosecution and crypto advocates fiercely debating whether policy arguments can enter the jury's consideration, and the outcome will reshape the regulatory boundaries of DeFi. (Background: Are Ethereum MEV bots laundering money? A U.S. court hears the MIT brothers’ case for the first time, involving sandwich arbitrage of 25 million dollars related to fraud) (Additional context: Pump.fun accused of organized gambling! Solana Labs and foundation executives listed as defendants, and Jito, which deals in MEV, is also not spared) The Southern District of New York Federal Court entered a critical hearing on October 29, marking the 11th day: 24-year-old Anton and 28-year-old James Peraire-Bueno are accused of siphoning 25 million dollars in just 12 seconds in April 2023 through an Ethereum 'maximal extractable value (MEV)' bot. This case involves the most sensitive topic in decentralized finance (DeFi)—whether transaction ordering constitutes legitimate arbitrage or fraud, and the verdict will not only determine the brothers' lives but may also redefine the scope of global blockchain regulation. The MEV theft case begins: The core controversy of 25 million dollars The indictment states that the brothers deployed a program under the codename 'Omakase', first releasing 'bait transactions' to lure automated programs known as 'sandwich bots' to copy trade, then using their own validator privileges to reorder blocks, ultimately washing out the targeted funds. The prosecution describes this as 'fraudulent theft', listing charges of wire fraud, money laundering, and more. The defense emphasizes that MEV activities are widespread on Ethereum, citing an ESMA report stating that total MEV earnings from December 2022 to January 2025 are approximately 963 million dollars, with profits of 417 million dollars, arguing that 'the brothers were merely playing a strategy that everyone is using'. The starkly different characterizations of the same technology laid the groundwork for this case. Prosecution and defense face off: Can policy arguments enter the jury? The focus of the attack and defense is no longer just on code details, but rather whether 'policy' can be brought into the jury's view. The U.S. prosecution submitted a written opinion, requesting the judge to reject the 'amicus brief' from the crypto advocacy organization Coin Center, arguing that the document encourages jurors to disregard the law itself through 'jury nullification'. The prosecution stated: 'Policy issues should be discussed in Congress, not debated in court.' Coin Center and the defense attorney countered, asserting that the brief provides a 'unique perspective' necessary for understanding the MEV economic mechanism, and without this context, 'ordinary on-chain behavior could be overly criminalized'. 'Code is law' vs. traditional justice: The chain reaction facing the industry The core argument of the defense is 'code is law'. They argue that the Ethereum protocol allows validators to determine transaction ordering; as long as consensus rules are not violated, profit distribution is a market outcome. The prosecution, however, cited the 'honest validator' theory, asserting that validators owe a duty of trust to other network users, and maliciously reordering transactions constitutes fraud. If this argument is supported by the court, the legal boundaries will significantly shift to the right: any strategy that exploits ordering advantages, including Flash Loans and cross-pool arbitrage, could fall under federal criminal jurisdiction. The industry fears that technological innovation will be labeled as 'market manipulation', leading to a potential outflow of funds and talent. Judicial milestone: How the ruling will reshape the DeFi regulatory blueprint This is the world's first criminal case focused on MEV. If the brothers are convicted, regulatory authorities could use this precedent to demand stricter on-chain monitoring, categorizing transaction ordering and protocol interactions as a new class of 'traceability manipulation'. Conversely, if acquitted, the court effectively acknowledges that 'code is law' has a defensive capacity, and future law enforcement must return to the legislative side to seek clear provisions, potentially leaving a 'gray window' in the short term. The trial is expected to conclude in November. Regardless of the outcome, this case has become a microcosm of the clash between traditional judicial frameworks and blockchain governance concepts. When the gavel falls, the DeFi ecosystem will receive a clear signal: the boundary between code and law will no longer remain ambiguous. Related Reports: Fed Philadelphia Chairman Paulson hints at more rate cuts within 2025, tariffs are only a short-term issue. Powell states 'tariffs are not the main cause of inflation', emphasizing that politics do not influence the Fed's message: further rate cuts may be on the horizon. The Federal Reserve cut rates by 0.25% in September, Powell stated 'the impact of tariffs is limited', Bitcoin surged past 117300. <Is Ethereum all illegal? New York prosecutors charge 'MEV bot crimes': nodes should maintain a duty of integrity; ordering transactions constitutes fraud and money laundering> This article was first published in BlockTempo, the most influential blockchain news media.