On March 12, a cryptocurrency trader experienced a sandwich attack during a stablecoin transfer valued at $220,764, resulting in a loss of nearly 98% of the amount to a Maximum Extractable Value (MEV) bot.
The trader converted $220,764 worth of USD Coin (USDC) into just $5,271 of Tether (USDT) within a mere eight seconds, as the MEV bot effectively executed a front-run of the transaction, netting over $215,500.
Data from an Ethereum block explorer indicates that the MEV attack took place in the USDC-USDT liquidity pool on a decentralized exchange, where $19.8 million is currently locked.
Transaction details of the sandwich attack.
The MEV bot initiated the front-run by removing all USDC liquidity from the Uniswap v3 USDC-USDT pool, only to reinstate it after executing the transaction, as noted by Michael Nadeau, founder of The DeFi Report.
The attacker granted the Ethereum block builder “bob-the-builder.eth” a tip of $200,000 from the $220,764 swap, netting an $8,000 profit for themselves, according to Nadeau.
A DeFi researcher known as “DeFiac” theorizes that the same trader, using different wallets, has been targeted by a total of six sandwich attacks, referencing “internal tools.” They highlighted that all funds moved from the borrowing and lending protocol Aave before reaching Uniswap.
Two wallets were also subjected to an MEV bot sandwich attack on March 12 at approximately 9:00 am UTC. The Ethereum wallet addresses “0xDDe…42a6D” and “0x999…1D215” faced sandwich attacks involving transactions of $138,838 and $128,003 respectively, occurring just three to four minutes prior.
These two traders executed the same swap in the Uniswap v3 liquidity pool as the trader involved in the aforementioned $220,762 transfer.
Some speculate that these trades may be attempts at money laundering.
“If you possess illicit funds, you could construct a highly MEV-able transaction, then privately send it to an MEV bot for them to arb it in a bundle,” said the founder of a crypto data dashboard, referencing the potential for laundering with minimal losses.
While initially critical of Uniswap, Nadeau later recognized that the transactions did not originate from Uniswap’s interface, which has MEV protection and default slippage settings.
He revised his earlier criticisms after confirmations from Uniswap’s CEO Hayden Adams and others about the platform’s safeguards against sandwich attacks.
Source of clarification on protections against sandwich attacks.
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