Ross Ulbricht, the creator of the Silk Road marketplace, lost $12 million in a cryptocurrency trading error, according to blockchain analytics firm Arkham Intelligence. Ulbricht or someone controlling his wallets, made a costly mistake while listing a memecoin called ROSS on a decentralized exchange.
Ross Ulbricht’s Crypto Wallets Lose $12 Million in Trading Mistake. Source: Arkham Intelligence on XHow the Error Happened
The mistake occurred while trying to provide liquidity for ROSS, a fan-made memecoin created after Ulbricht’s release. Instead of setting up the liquidity pool correctly on the decentralized exchange Raydium, Ulbricht set the initial price too low. As a result, a trading bot known as a Maximal Extractable Value (MEV) bot instantly bought $1.5 million worth of ROSS tokens at the mispriced rate. The bot then sold these tokens into the existing market, making a profit.
Ulbricht’s wallet repeated the mistake, losing an additional $10.5 million worth of tokens—around 35% of the total supply. In total, the wallets lost about 40% of the ROSS supply, leading to a 90% price crash.
Ulbricht’s Wallets Still Hold $200,000 Worth of ROSS
Arkham explained that Ulbricht, or whoever was managing the wallets, tried to add liquidity to the pool using the wrong market-making system. Instead of using a system designed for precise liquidity management, they mistakenly created a pool using a different pricing model. This error caused the tokens to be available at a much lower price than intended, allowing the bot to exploit the mistake.
Following the incident, the price of ROSS dropped sharply. However, it has since recovered and gained 750% in the past day.
ROSS is trading around 1 cent and is up around 750% over the last day. Source: DEX ScreenerDespite the losses, Ulbricht’s wallets still hold about 10% of the ROSS supply, worth approximately $200,000.
Ulbricht was the founder of Silk Road, an online marketplace that used Bitcoin for transactions. The Silk Road, active from 2011 to 2013, facilitated the trade of goods and services, including illegal drugs, using Bitcoin. During its operation, the marketplace processed over $200 million in transactions and served more than 100,000 users.
He was arrested in 2013 and sentenced to life in prison in 2015. On Jan. 22, 2024, Donald Trump pardoned him as part of his pro-crypto stance during his campaign.
The wallets affected in this trading mistake are linked to FreeRoss.org, a campaign run by Ulbricht’s family to support his release. One of these wallets had received 50% of the ROSS token supply from its developer before the mistake happened.
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