- A DeFi trader lost over $700K in stablecoins due to a sandwich attack on Uniswap v3.
- Speculation arose over whether the incident was a failed transaction or an attempt at money laundering.
A peculiar Uniswap v3 transaction has left the crypto community in confusion after a DeFi investor lost over $700,000 worth of USDC through a front-running method.
The incident, which took place in a string of consecutive trades, has raised serious doubts about the safety of decentralized finance. Some researchers in the blockchain community speculated that the loss was not coincidental but was a money-laundering attempt.
The trader attempted to swap $732,583 USDC for USDT via the Uniswap liquidity pool but was intercepted by MEV bots, resulting in a loss of $714,000.
A trade worth $221,000 in USDC was exchanged for only $5,000 in USDT. The trade was suspicious since it involved setting slippage at 100% so that bots would be able to manipulate it heavily.
DeFi Research founder Michael Nadeau noted that sandwich attacks take advantage of the transparency of blockchain by sandwiching two trades around a large trade in order to make a profit from price movement.
In this case, the liquidity from the USDC–USDT pool was drained before the trade was executed, only to be restored after completion. The attack was traced back to an MEV bot, which even paid a $200,000 tip to a block builder named bobTheBuilder while securing an $8,000 profit for itself.
Was This a Money Laundering Attempt?
Even if the crypto community is accustomed to sandwich attacks, there is a chance that there is more involved, experts claim. A closer look in the transaction history indicated that the said address was funded from a mixer-like platform, which is commonly associated with transaction origin hiding.
The unusual movement of funds between different addresses before the botched swap helped fuel growing speculation that this was something more than a simple mistake.
Anonymous DeFiLlama creator 0xngmi said that, if so minded, one could construct an easily front-runnable transaction and then secretly pass it along for execution by an MEV bot.
especially in this particular case where:
– address was funded from a mixer-like platform
– the way the money was received was from another address withdrawing from aave into a different address (very uncommon, maybe used to fuck with money tracking software)
– that previous…— 0xngmi (@0xngmi) March 12, 2025
This would allow for washing funds while restricting losses. The complexity of the fund transfers and the apparent inexperience of the trader in setting slippage appropriately made the issue even more suspicious.
The typical user would generally swap stablecoins by transferring funds directly from one account to another. But this address made a circuitous journey, withdrawing from Aave and sending it to a fresh address before engaging with Uniswap in a way that guaranteed loss.
Taking the sophisticated nature of DeFi users into account, it was highly unlikely that such a sophisticated individual would be making such a basic mistake.
Uniswap’s Vibe Curator Clarifies MEV Protection Limits
Niko, the Uniswap vibe curator, said after the event that the transaction was not done through their front-end interface, which has MEV protections in place. Instead, it was done through a more outdated swap router that allowed for excessive slippage settings.
Some clarifying points:
> This was not done on the Uniswap interface (which has suggested slippage)
> This was done through the old v3 swap router (not the Universal Router)
> Looks like they set slippage to 100% for this trade
— niko (@nikokampouris) March 12, 2025
DeFi researchers were divided, with some claiming that Uniswap was responsible for ensuring a safer environment for trades, while others were convinced that the burden was still on individuals to set up their trades appropriately.
Uniswap Labs founder Hayden Adams also spoke up, acknowledging the bigger issue with scams in crypto. He said that while such hacks were undesirable, scams do exist in the non-crypto world and can be more malicious.
yes, there are a lot of scams in crypto, its a big problem, and something we should work hard to combat
that said when I interact with the world beyond crypto its filled with scams, often harder to spot and even more malicious
— Hayden Adams 🦄 (@haydenzadams) March 12, 2025
The recent developments have once again stoked debates about the threats that decentralized trading platforms represent. With billions in liquidity attracted by DeFi, malicious players and opportunistic bots continue to take advantage of weaknesses in transaction execution.
Industry participants stress the need for more security features, such as reducing slippage tolerance, using private transaction relays, and selecting MEV-resistant protocols.
