Wallets Linked to Silk Road Founder Ross Ulbricht Lost $12 Million Due to Trading Errors with the ROSS Memecoin

The loss occurred when the wallet handler mistakenly set up liquidity pools at incorrect prices on the Raydium exchange.

Several cryptocurrency wallets linked to Ross Ulbricht, the founder of the defunct Silk Road black market, have reportedly lost a total of $12 million due to trading errors involving ROSS, a fan-made memecoin.

According to a report by Arkham Intelligence, a blockchain analytics firm, the incident occurred over the last seven days as the price of ROSS experienced a steep decline of 48.35%.

The trading errors began when the person managing Ulbricht’s wallets made a mistake while setting up a liquidity pool on the Raydium exchange, ultimately selling the tokens at a price significantly lower than the market rate.

This error allowed a Maximal Extractable Value (MEV) bot to quickly buy the tokens at a deep discount and sell them on the exchange at the correct price, making a substantial profit.

The first error resulted in a loss of approximately $1.5 million, which was later followed by another error that led to an additional loss of $10.5 million.

As a decentralized exchange (DEX), Raydium enables liquidity providers to deposit their tokens into a pool from which traders can buy and sell. In return for providing liquidity, traders pay a fee that is distributed among the providers.

When setting up a liquidity pool on a DEX, the provider needs to specify the price at which the tokens will be sold. If the price is set too low, the tokens will be quickly bought up by MEV bots or other traders, leading to significant losses for the provider.

The trading errors connected to Ulbricht's wallets have caused the ROSS market to drop by 90%. Despite the massive sell-off, data from Etherscan reveals that wallets linked to Ulbricht still hold at least 10% of the total ROSS supply.

Ross Ulbricht, a key figure in the cryptocurrency space, gained notoriety for his involvement with Silk Road, an online black market that utilized Bitcoin (BTC) for payments.

Following his arrest in 2015, Ulbricht was sentenced to two life sentences plus 40 years in prison for operating Silk Road, which facilitated the sale of illegal substances, counterfeit goods, and stolen credit cards.

Throughout the years, Ulbricht's family and supporters have relentlessly campaigned for his release, garnering substantial support from the crypto community.

Some of these campaigns, such as FreeRoss.org, have aimed to raise awareness about Ulbricht's case and advocate for his clemency. Notably, on January 22, Ulbricht was among the individuals pardoned by former U.S. President Donald Trump.

Interestingly, the launch of ROSS came shortly after Ulbricht's release from prison, further intertwining his name with the memecoin.