Tether, a centralized entity behind popular stablecoin USDT, has blacklisted an Ethereum validator who had front-run MEV bots, earning $25 million via a sandwich attack.
The exploiter, who called themselves “Sandwich the Ripper,” will no longer be able to receive, send or redeem the $3 million worth of USDT held in their address.
Tether’s decision to blacklist the exploiter has drawn criticism from industry participants.
Uri Klarman, the CEO of bloXrouteLabs, told Blockworks in an interview that the exploiter did exactly what a sandwich bot would do.
“It didn’t hurt the consensus, it didn’t create two blocks at the same time, it gave them an invalid block that didn’t propagate,” Klarman said.
This is similar to what front-running MEV bots do — the only difference, Klarman said, was that it took money from the searcher in a way that they did not anticipate.
“We don’t do this to others, but this guy managed to trick the searchers and somehow they get blacklisted…it’s a really bad precedent,” Klarman said.
In response to why the company had decided to blacklist the attacker, a Tether spokesperson told Blockworks that “Tether routinely works with law enforcement agencies around the world as part of our commitment to cooperation, transparency, and accountability.”
Tether has not specified which official entity requested them to blacklist “Sandwich the Ripper” but noted that “we respect official requests to temporarily freeze funds and are proud of our role as industry leaders in promoting cooperation between industry and government authorities.”
“Sandwich the Ripper” has since moved their USDC to a different wallet, a tweet by umbrella_uni noted “Most likely to circumvent USDC blacklist as Circle would have to blacklist all ‘lent’ USDC deposits.”
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Source: https://blockworks.co/news/tether-blacklists-mev-bots-exploiter