Unfortunate MEV Bot Takes $12 Million Loan for $20 Profit

Coinspeaker
Unfortunate MEV Bot Takes $12 Million Loan for $20 Profit

In the world of the decentralized finance (DeFi) ecosystem, where sophisticated bots and algorithms exploit market inefficiencies, even the most advanced strategies can sometimes result in underwhelming outcomes. On September 5, a Maximum Extractable Value (MEV) bot operator faced such a situation after borrowing nearly $12 million in Wrapped Ether (WETH) but ultimately profiting just $20.

Blockchain analytics platform Arkham Intelligence shared the mishap on X, detailing how the bot deployed a “sandwich” attack to manipulate a token swap.

The strategy involves detecting a pending transaction. In this case, a user swapping around $5,000 worth of Shuffle (SHFL) tokens and placing two transactions around it. The bot first inflates the token price before the user’s trade, then sells immediately after, attempting to profit from the price difference.

For this attack, the MEV bot borrowed   $11.97 million in a flash loan, hoping to manipulate a token swap to secure a quick profit.  However, the transaction did not work in its favor.

After getting the loan, the bot then carried out 14 separate transactions as part of the sandwich attack, borrowing and repaying roughly $700,000 in USDC  stablecoin and WETH across two DeFi protocols Aave and Uniswap.

Etherscan data showed that the entire transaction was confirmed in a single block, meaning that the MEV bot executed the 14 transactions within around 12 seconds.

Despite the intricacies of the transaction, the unlucky MEV bot operator walked away with just $20 in profit after paying Ethereum (ETH) fees.

The incident occurred when MEV bots were gaining traction in the crypto world. Cybercriminals often use them to exploit market inefficiencies for substantial, quick profits.

Recently, a well-known MEV bot operating under the pseudonym jaredfromsubway.eth has resurfaced with enhanced techniques. The notorious bot, which was prominent early last year, had vanished from the crypto landscape but has now returned with advanced capabilities, according to EigenPhi.

The growing prevalence of these bots has drawn the attention of law enforcement. In May,  prosecutors in the United States charged two brothers for stealing approximately $25 million through a new scheme targeting crypto trading bots on the Ethereum blockchain.

The two brothers,  Anton Peraire-Bueno, 24, from Boston, and James Pepaire-Bueno, 28, from New currently facing several charges, including conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering.

Unfortunate MEV Bot Takes $12 Million Loan for $20 Profit