• Crypto stakeholders have criticized USDT issuer Tether for blacklisting a validator address that drained $25 million from maximal extractable value (MEV) bots.
• On-chain sleuth ZachXBT believes Tether likely got a court order to blacklist the wallet, while others said it was evidence that influential people were behind the MEV bots.
• Tether responded with a statement saying they respect official requests to temporarily freeze funds and are proud of their role as industry leaders in promoting cooperation between industry and government authorities.
Tether Blacklists Wallet That Drained $20 Million From MEV Bots
The USDT issuer Tether recently blacklisted a validator address that drained $25 million from maximal extractable value (MEV) bots. This incident happened on April 3 when the MEV bots were executing a sandwich trade and had over $20 million stolen by the blacklisted address, which exploited a bug in the MEV-boost relay to back-run their transactions and steal 3 million USDT and $22 million in ERC-20 tokens.
Crypto Community Reacts
The crypto community had mixed reactions to the news. Polygon co-founder Jaynti Kanani described it as a “bad precedent”, while Fastlane co-founder Thogard said this was “the most concerning DeFi development of 2023” due to its implications for Ethereum’s consensus/social layer. On-chain investigator ZachXBT believes Tether likely got a court order to blacklist the wallet, while others speculated that influential people were behind the MEV bots.
What Are MEV Bots?
MEV bots are high frequency traders that take advantage of speed and complexity of blockchain technology to capture arbitrage opportunities. The sandwich trade they attempted would have front run other traders’ transactions if successful.
Tether’s Statement
In response to criticism, Tether released an official statement saying they routinely work with law enforcement agencies around the world as part of their commitment transparency, accountability, and cooperation; they also expressed pride in their role as industry leaders in promoting cooperation between industry and government authorities.
Conclusion
Although some felt uneasy about Tether’s decision to blacklist this particular wallet address without providing more information on why it was done, it is clear that there is still much legal cooperation between cryptocurrency companies and government authorities when needed – something which could be beneficial for further adoption of cryptocurrencies worldwide.