Request for Dismissal of Charges
In an unusual move, two brothers from Massachusetts—Anton and James Pepaire-Bueno—are requesting a dismissal of charges related to a $25 million theft of Ethereum, claiming that recent changes in policies from the Department of Justice (DOJ) impact the legal status of the assets involved.
Background of the Case
The Pepaire-Bueno brothers, both trained at MIT in coding, were accused last year of manipulating the Ethereum network‘s transaction validation system to illegally acquire significant amounts of Ethereum from various traders. Initially facing charges of wire fraud and conspiracy to launder money, the federal government later added allegations of conspiracy to receive stolen property against them.
Defense Argument
This week, their defense team submitted a motion in Manhattan federal court, arguing that the entire case should be thrown out, partly based on a recent DOJ memorandum released last week, which urged a reassessment of the treatment of cryptocurrency-related offenses that had been established during the Trump administration. This memo disbanded the DOJ’s crypto enforcement team and indicated a halt in pursuing many criminal cases pertaining to digital assets.
In particular, the defense highlighted a statement from the memo indicating that the DOJ does not act as a regulator for digital assets and will not engage in litigation that attempts to impose regulatory standards on cryptocurrencies. The Pepaire-Bueno legal team asserted that this stance undermines the prosecution’s claims, particularly regarding the charge of conspiracy to receive stolen property. The essence of their argument is that if the DOJ cannot definitively classify cryptocurrency as property, they cannot legally support the notion that the Pepaire-Bueno brothers engaged in the theft of such assets.
Judicial Proceedings
The DOJ has refrained from commenting on the specific legal merits of this defense. U.S. District Judge Jessica G.L. Clarke is currently tasked with determining whether to dismiss all or part of the charges against the defendants based on this new argument.
Wider Implications
The ripple effects of the DOJ’s recent shift have ignited discussions about the potential implications for pending criminal cases in the cryptocurrency arena, particularly the ongoing prosecution of Roman Storm, founder of the cryptocurrency privacy platform Tornado Cash. Storm was arrested earlier this year under allegations of assisting North Korea in laundering vast sums of digital assets by allowing the state unfettered access to his platform.
According to a spokesperson from the DOJ as of Wednesday, the case against Storm is still scheduled for trial this coming summer, ostensibly under the renewed directives concerning cryptocurrencies in the wake of the departmental policy overhaul.
