​Hacker cheats MEV bots and makes $20 million

What’s new? An unknown hacker managed to defraud MEV bots and cause $20 million in damage. On April 3 a developer under the nickname 3155.eth reported this on Twitter. According to his data, the hacker became a validator 18 days ago and started preparing tokens 16 days ago, which suggests that the incident looks like a well-planned attack. According to 3155.eth, this could be a turning point for the entire MEV ecosystem.

Dusk for sandwich bots? A few top mev bots were targetted in blockhttps://t.co/tnlx5tAX1G@peckshield @BlockSecTeam @bertcmiller @samczsun @bbbb — 3155.eth (@punk3155) April 3, 2023

What else is known? According to PeckShield, a cybersecurity company, the victim’s transaction was replaced by transactions exploiting MEV bots that included a reverse swap to lock in profits. In doing so, PeckShield estimated the loss at $25 million. The stolen funds are primarily located at three addresses. Another 8 of the attacker’s addresses were funded from the KuCoin crypto exchange.

🚨🚨🚨 #MEV The interesting bundles from sandwich-focused MEV bots on https://t.co/4AYDU3xkN3 seems broken. The backrun txs, which are supposed to do the reverse swap and take profits, were reverted!Our analysis shows that the victim txs were replaced by the bot-exploiting… https://t.co/pMOkKpVM8v — PeckShield Inc. (@peckshield) April 3, 2023

About MEV bots. Maximal Extractable Value (MEV) is a way for miners or validators to gain additional value by creating a specific sequence of transactions when creating a block. MEV bots can be used to find speculative transactions with higher execution fees.

The method is often practiced by independent network members called searchers. They run sophisticated algorithms to find profitable positions to receive MEVs and use special bots to process the desired transactions. Such manipulations significantly increase the load on the network and result in high fees.

Thus, on March 11, as a result of the MEV bot activation by one of the pools of the decentralized exchange Uniswap v2, a user exchanged 2 million USDC stablecoins for 0,05 USDT. This happened against the background of the collapse of Silicon Valley Bank (SVB) and the loss of the stablecoin’s peg to the US dollar.