Silk Road founder’s wallets lose $12M in memecoin mishap

Published 31/01/2025, 11:28
Silk Road founder’s wallets lose $12M in memecoin mishap

Ross Ulbricht, the creator of the infamous Silk Road marketplace, or someone managing his crypto wallets, reportedly incurred a loss of $12 million due to a trading error involving a memecoin named ROSS. The blunder occurred while attempting to provide liquidity on Raydium, a decentralized exchange (DEX), according to Arkham Intelligence, a blockchain analytics company.

The incident took place when the liquidity pool for the ROSS token was set up at an incorrect price. As a result, a maximal extractable value (MEV) bot was able to instantly acquire $1.5 million worth of the token, which constituted 5% of its total supply.

The bot then sold these tokens into the existing pool for a profit. The wallet associated with Ulbricht repeated the mistake, leading to an additional loss of $10.5 million, approximately 35% of the token’s supply.

Arkham Intelligence detailed that the error was made when Ulbricht’s wallet tried to add single-sided liquidity with the intention of passively selling the coins. Instead, a pool was mistakenly created using Raydium’s Constant-Product Market Maker (CPMM) model rather than the intended Concentrated Liquidity Market Maker (CLMM) model. Consequently, the MEV bot capitalized on the opportunity and sold off the tokens for more than $600,000. This activity caused the value of the ROSS token to plummet by 90%.

Despite the significant losses, the wallet addresses tied to Ulbricht still retain about 10% of the ROSS token supply, which is currently valued at approximately $200,000. These wallet addresses are linked to FreeRoss.org, a campaign led by Ulbricht’s family that advocates for his release from prison. Notably, Ulbricht’s Solana donation address had received half of the ROSS supply from the token’s developer.

Ross Ulbricht was previously convicted for operating Silk Road, an online black market that utilized Bitcoin for transactions, and was sentenced in 2015. He was pardoned by former US President Donald Trump on January 22, fulfilling one of Trump’s campaign promises related to cryptocurrency.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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