Tether, the company behind the stablecoin USDT, has blacklisted an address responsible for draining Maximal Extractable Value (MEV) bots for a sum of $20 million.
MEV bots exploit information about upcoming transactions to make profits, with sandwich trading being a popular method.
“Sandwiching” involves placing orders before and after the target trade, allowing the trader to front-run and back-run at the same time, sandwiching the original pending transaction in between.
The blacklisted address took advantage of a bug in the MEV-boost relay to back-run the MEV’s transaction, causing losses of nearly $20 million in various digital assets, making it the largest MEV exploit to date.
Etherscan, a popular blockchain explorer, has flagged the address and warned of its involvement in the exploit.
However, Tether’s blacklisting of the address has garnered some criticism from the crypto community for its censorship approach.
Arthur, an engineer at the Kraken exchange, called the move “bullshit” and argued that MEV bots also take advantage of traders.
Meanwhile, Jaynti Kanani, co-founder of Polygon, called Tether’s action a “bad precedent,” and Jordan Hagan, co-founder of Fastlane Labs, said it was the “most concerning DeFi development of 2023.”
MEV bots are a contentious issue in the crypto world, with some considering them an invisible tax on traders.
Recently, 27 Ethereum-based projects have joined forces to launch MEV Blocker, aiming to minimize the amount of value extracted from traders.
It remains unclear whether Tether’s decision to blacklist the address was due to a court order or not.
Tether’s willingness to block or unblock “large amounts based on activity in the consensus layer (Beacon Chain)” has raised concerns in the crypto community, indicating potential centralization of power.
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