TL;DR
- Ross Ulbricht loses $12 million due to an error in trading a memecoin created in his honor.
- A maximum extractable value (MEV) bot took advantage of the incorrectly priced tokens, executing quick transactions to make profits.
- Despite the significant loss, Ulbricht’s wallets still hold around $200,000 in tokens, showing that the project is not completely lost.
In an unexpected series of errors in the crypto market, wallets linked to Ross Ulbricht, the creator of Silk Road, suffered a $12 million loss due to a slip-up while trading a memecoin created in his honor. The error occurred while attempting to add liquidity through a decentralized exchange (DEX), Raydium, a popular platform on the Solana network.
According to blockchain analytics firm Arkham Intelligence, Ulbricht, or a user operating his wallets, made a mistake when initializing the liquidity pool for the ROSS token, a memecoin launched after his recent release. By doing so, he set the price incorrectly, which allowed a maximum extractable value (MEV) bot to immediately benefit from the mistake.
The MEV bot spotted the opportunity to buy these tokens, which were incorrectly priced at $1.5 million (equivalent to 5% of the supply), and quickly resold them, generating an instant profit. According to Arkham, the bot carried out a series of fast transactions to capitalize on the price drop, causing ROSS’s value to plummet by 90%.
The Second Error That Increased Losses
Ulbricht attempted to fix the initial error by adding liquidity differently, but he made a similar mistake. Instead of using the “Concentrated Liquidity Market Maker” (CLMM), he opted for the “Constant-Product Market Maker” (CPMM), which resulted in the loss of an additional 35% of the supply, or about $10.5 million. This new slip-up was taken advantage of by the same MEV bot, which sold the tokens for more than $600,000.
Despite these setbacks, the project is not completely lost for Ulbricht. Arkham’s analysis reveals that the wallets still hold 10% of the total ROSS supply, worth approximately $200,000. These funds remain in wallet addresses associated with a donation campaign called FreeRoss.org, launched by his family.
The impact of this incident not only affected Ulbricht but also the value of ROSS, which suffered a dramatic drop. However, the token has experienced a more than 700% increase in the last 24 hours, although it is still priced at less than a cent.
Despite the loss, some market observers continue to see potential in the project.
