Tether blacklists $3 million of funds taken from multiple MEV bots

Stablecoin issuer Tether blacklisted $3 million of funds that were taken in a crafty attack on MEV bots earlier this month.

On April 3, the attacker took advantage of being an Ethereum validator and a loophole in the way commonly used MEV software works to manipulate other MEV bots and siphon off $25 million of value. MEV refers to maximal extractable value and is essentially a form of on-chain high-frequency trading. It's typically done in an automated fashion by bots, as speed is so important.

Tether is a company that runs the centralized, eponymous stablecoin tether and has the ability to freeze it, often in response to legal and law enforcement requests. In this case, it froze $3 million of tether in the wallet that benefited from the attack.

The wallet also holds $18 million in wrapped ether, the decentralized stablecoin dai and wrapped bitcoin, according to Arkham Intelligence. The wallet also sent $5.3 million of the stablecoin USDC to another wallet that then deposited the funds in lending platforms Compound and Aave.

Some crypto commentators noted that MEV bots have been taking money from regular crypto users for years, but when someone turns the tables on the bots their proceeds are frozen.

"MEV Bots have been slaughtering retail users via sandwiching for years. Nobody blacklists them. Someone dare fool a MEV bot and give them a taste of their own medicine and they get blacklisted," said Lefteris Karapetsas, founder of portfolio tracking app Rotki, on Twitter. Karapetsas noted that legal proceedings probably prompted the action, but the sense of irony remained.