USDC to USDT exchange suffered a loss of $215,000. How does MEV attack stablecoin transactions?
What else is safe?Original Title: Crypto trader gets sandwich attacked in stablecoin swap, loses $215K
Author: Brayden Lindrea, Cointelegraph Author
Compiled by: ChatGPT
Editor’s Note: This article reports on a sandwich attack incident that occurred during a cryptocurrency trade, where a trader lost over $215,000 while swapping stablecoins. The article details the process of the attack, including how MEV bots profited from front-running transactions, and discusses potential money laundering activities. It also mentions the protective measures taken by the Uniswap platform to prevent such attacks and clarifies initial criticisms.
Below is the original content (reorganized for readability):
On March 12, a crypto trader became a victim of a sandwich attack while making a $220,764 stablecoin transfer, losing nearly 98% of its value, amounting to $215,000, which was captured by MEV bots.
The $220,764 worth of USDC stablecoin was swapped for $5,271 worth of Tether USDT in just 8 seconds, as the MEV bot successfully front-ran the transaction, profiting over $215,500.
Data from the Ethereum block explorer shows that this MEV attack occurred in the USDC-USDT liquidity pool on the decentralized exchange Uniswap v3, which locked assets worth $19.8 million.
Details of the sandwich attack transaction Source: Etherscan
According to Michael Nadeau, founder of The DeFi Report, the MEV bot front-ran the transaction by swapping all USDC liquidity out of Uniswap v3's USDC-USDT pool and then putting it back after the trade was executed.
Nadeau stated that the attacker paid a $200,000 tip to Ethereum block builder "bob-the-builder.eth" from the $220,764 transaction and profited $8,000 themselves.
DeFi researcher "DeFiac" speculated that the same trader using different wallets may have encountered a total of six sandwich attacks, citing "internal tools" as evidence. They noted that all funds came from the lending protocol Aave before being deposited into Uniswap.
Two of the wallets became victims of the MEV bot sandwich attack around 9 AM UTC on March 12. The Ethereum wallet addresses "0xDDe…42a6D" and "0x999…1D215" were sandwich attacked in transactions that occurred three to four minutes earlier, losing $138,838 and $128,003, respectively.
These two traders executed the same swap as the trader making the $220,762 transfer in the Uniswap v3 liquidity pool.
There is speculation that these transactions may be related to money laundering.
0xngmi, founder of the crypto data dashboard DefiLlama, stated, "If you have NK illegal funds, you can construct a trade that is very easily susceptible to MEV attacks, then privately send it to an MEV bot and let them arbitrage it in a bundle. This way, you can wash all the money with almost zero loss."
Although Nadeau initially criticized Uniswap, he later acknowledged that these trades did not originate from Uniswap's frontend, which has MEV protection and default slippage settings.
After Uniswap CEO Hayden Adams and others clarified the protective measures taken by Uniswap to prevent sandwich attacks, Nadeau retracted his criticisms.
