Two brothers charged with stealing $25 million worth of Ethereum launched a novel legal defense in federal court this week: Their case must be dismissed immediately, so they say, because new DOJ crypto policies imply the property they’re accused of stealing can’t really be considered property in the first place.
Last spring, the DOJ accused Anton and James Pepaire-Bueno, two MIT-educated coding whizzes, of exploiting the process by which the Ethereum network validates transactions to steal millions of dollars worth of ETH from traders. The brothers were initially charged with wire fraud and conspiracy to commit money laundering. They were later additionally charged with conspiracy to receive stolen property.
This week, the brothers’ attorneys filed a motion in Manhattan federal court arguing the entire case should be dismissed—in part because of a DOJ memo, circulated last week, which detailed how the department should reevaluate its crypto caseload under the Trump administration.
Among other things, the memo shuttered the DOJ’s crypto enforcement team, and outlined how the department should halt pursuit of criminal cases in several areas related to digital assets.
Attorneys for the Pepaire-Bueno brothers took particular note of a passage in the memo which declared the DOJ “is not a digital assets regulator” and “will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets.”
The lawyers now contend the DOJ’s insistence on refraining from weighing in on the securities status of various crypto assets means prosecutors can no longer claim the Pepaire-Bueno brothers committed several of the crimes they’re accused of carrying out.
One of the charges the brothers currently face, for instance—conspiracy to receive stolen property—is now moot, the lawyers say. Why? Because if the DOJ can’t decide whether crypto assets are securities, they cannot assert such assets meet the legal definition of property, whether they were stolen or not. That’s the argument, anyway.
The DOJ declined to comment for this story when probed about the potential merits of that argument.
U.S. District Judge Jessica G.L. Clarke, who is overseeing the case, will now weigh whether to grant all or part of the defendants’ motion to dismiss.
Ever since the DOJ publicly overhauled its digital asset policies, speculation has abounded about what the development could mean for active criminal cases involving industry leaders. Of particular note is the United States’ ongoing case against Roman Storm, a founder of crypto privacy service Tornado Cash.
In 2023, U.S. law enforcement arrested Storm, accusing him of aiding North Korea in laundering hundreds of millions of dollars worth of digital assets—effectively by not restricting the state’s access to the platform.
Last week’s DOJ crypto memo, however, ordered prosecutors to only pursue “enemy groups” that use crypto, and “not pursue actions against the platforms that these enterprises utilize to conduct their illegal activities.”
As of Wednesday, a DOJ spokesperson told Decrypt, Storm’s case is still set to go to trial this summer.
