Crypto trader gets sandwich attacked in stablecoin swap, loses $215K

This article reports on a sandwich attack incident that occurred during a cryptocurrency trade, where a trader lost over $215,000 while swapping stablecoins.

A crypto trader had nearly 98% of the value in a $220,764 stablecoin transfer wiped out by an MEV bot performing a sandwich attack.

The trader lost $215,500 while the bot netted a profit when $220,764 worth of USDC stablecoin was swapped for $5,271 worth of Tether USDT in just eight seconds.

Data from the Ethereum block explorer shows the MEV attack took place in the USDC-USDT liquidity pool on decentralized exchange Uniswap v3, which had assets worth $19.8 million locked.

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 pulling all the USDC liquidity out of Uniswap v3's USDC-USDT pool and then returning it after the trade was completed.

The attacker then paid a $200,000 tip to Ethereum block builder “bob-the-builder.eth” out of the $220,764 transaction and made an $8,000 profit.

DeFi researcher ‘DeFiac’ speculates that the same trader using different wallets may have encountered a total of six sandwich attacks, citing “internal tools” for analysis. They add that all the funds originated from lending protocol Aave before being deposited into Uniswap.

Two of the traders fell victim to 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 $128,038, respectively.

Both of these traders carried out the same trade in the Uniswap v3 liquidity pool when they executed a large portion of the USDC-USDT liquidity.

There is speculation that these transactions may be related to money laundering.

0xngmi, founder of the crypto data dashboard DefiLlama, said: "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, named you can wash all the money with almost zero loss."