Silk Road Founder Ross Ulbricht Loses $12M in Crypto Liquidity Blunder

Highlights

Ross Ulbricht lost $12M after mistakenly creating the wrong liquidity pool on Radium.
In place of a CLMM pool, Ulbricht created CPMM, which released the 40% of the ROSS supply to buyers.
With a 90% drop in ROSS price, a MEV model earned $600k in profits.

The famous Silk Road Founder Ross Ulbricht lost $12M after making a costly mistake. However, whether he made this loss or if someone else handling his wallet caused it is unclear. Although such profit and loss are common in the industry, a crypto liquidity blunder on Raydium took the crypto community by surprise. Let’s discuss how this happened.

Ross Ulbricht Lost $12M While Providing Liquidity To Raydium

Ross Ulbricht was recently pardoned by Donald Trump after being convicted in 2015 of money laundering and drug trafficking conspiracies. During these 11 years, the crypto community continuously supported him. They even created the ROSS crypto coin to support him after his release and shared 50% of the token’s supply with him, which contributed to this $12M loss.

According to Arkham Intelligence, Ulbricht or the wallet controller ran two separate transactions in an attempt to liquidate these tokens on January 29. To his surprise, a critical error was made where the person mistakenly created the Constant-Product Market Maker (CPMM) pool instead of the Concentrated Liquidity Market Maker (CLMM), which allows the liquidity providers to set a specific price for the trade.

However, this mistake caused the CPMM to immediately make the ROSS tokens available for trade at unfavorable prices. This cost the Silk Road Founder $12M and heavily impacted the ROSS price.

Ross Token Price Crashed 90%

The ROSS/SOL trading pair chart shows a massive 90% crash caused by this crypto liquidity blunder. According to the chart, the price dropped from $0.039 SOL per ROSS to $0.0036 SOL, a 90-92% drop within just two hours.

At present, the token trades at $0.0005209 and is showing a 55% decline on the weekly charts. However, despite that, the token is attracting investors’ attention, as its trading volume is continuously rising. It is currently at $508.27K after a 24% surge.

As the Silk Road founder lost 40% of the ROSS token’s supply, the massive liquidity unloading resulted in a constant price drop. However, a few exploited the situation, profiting from this drop.

MEV Bot Earned $600K With Ross Ulbricht Loss

This first transaction from Yblirict’s account became an opportunity for the Maximal Extractable Value (MEV) bot. The bot spent around $556 to buy 398.6M( 5% of the ROSS Token supply), which would have been worth $1.5M in regular price. Soon after that, the bot sold it for 2,669 SOL ($643k), making a profit of nearly $600k.

This incident highlights the high risk associated with crypto trading. The market has many factors and complexities, which need to be considered and learned to stay profitable or at least minimize loss. Investors should have proper technical knowledge of the industry to avoid such mishaps.

Bottom Line

Donald Trump’s presidential pardon freed the Silk Road founder after 11 years. This Ross Ulbricht news has been bullish for the ROSS token, pushing its performance for this good. Interestingly, even before this pardon, the ROSS price jumped 22%. However, it crashed 50% over the week after Ulbricht or his wallet controller mistakenly availed 40% of the total supply at a low price. With that, Ulbricht faced a $12M loss; meanwhile, an MEV bot made $600k in profits.

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Pooja Khardia

Pooja Khardia is a seasoned crypto content writer with 6+ years of experience in writing, including in blockchain, cryptocurrency, DeFi, and digital finance reporting. In her adventure journey, she is currently working with CoinGape Media and leading their Trending Section. Here, she uses her expertise to deliver analytics, market insights, price predictions, and information on what’s trending in the crypto space, aiming to keep the crypto and web3 community updated with market trends and important insights. Known for a user-centric and straightforward writing style, Pooja is passionate about making crypto easy and accessible. Her writing blends market research with storytelling, helping readers stay ahead in a fast-paced industry. When not behind the keyboard, Pooja embraces her creative side through drawing and crafting. Connect with Pooja on LinkedIn or X.

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