Ross Ulbricht, the founder of the Silk Road, recently suffered a significant loss of $12 million due to a liquidity mistake on the Solana blockchain, according to a report by Arkham Intelligence. The incident occurred when Ulbricht attempted to provide liquidity for a token, PumpFun (PUMP), which was sent to his Solana donation address.
Ulbricht, or someone with access to his wallets, aimed to sell off the token by adding single-sided liquidity on Raydium, a decentralized exchange. However, in a critical error, he initialized the liquidity pool at the wrong price and used Raydium’s Constant-Product Market Maker (CPMM) instead of the intended Concentrated Liquidity Market Maker (CLMM). This mistake opened the door for a miner-extractable-value (MEV) bot to exploit the situation.
The bot took advantage of the liquidity pool misconfiguration, seizing 5% of the total token supply, worth $1.5 million, and selling it off, causing the token’s price to plummet by 90%. Undeterred, Ulbricht attempted to correct the error by adding liquidity again but inadvertently triggered another loss of $10.5 million, this time affecting 35% of the total supply.
Last week, Ulbricht’s donation address had received 50% of the PumpFun coin supply from its developer, marking a notable increase in holdings. Despite losing nearly 40% of the token’s supply in the liquidity mishap, Ulbricht still retains 10% of the remaining coins in a separate address. The remaining balance, worth approximately $200,000, has been correctly added to the Raydium CLMM pool.
This incident, uncovered by Arkham, highlights the risks involved in decentralized finance (DeFi) and liquidity provision, especially when errors in liquidity pools can result in massive losses.
In a separate development, former U.S. President Donald Trump recently commuted the life sentence of Ross Ulbricht, who had been serving time for creating and operating the Silk Road marketplace. Ulbricht’s supporters had long advocated for his release, citing the perceived harshness of his sentence. Trump’s decision to pardon Ulbricht came after he had spent more than 10 years in prison.
This move has prompted others, including the parents of jailed FTX founder Sam Bankman-Fried (SBF), to explore similar options for their son. According to a Bloomberg report, Joseph Bankman and Barbara Fried, both Stanford Law professors, have sought legal advice on securing a pardon for SBF. Bankman-Fried is currently serving a 25-year prison sentence, and his parents are reportedly hoping Trump may be sympathetic to their case following his recent actions.
The efforts to free SBF, whose supporters have not mobilized in the same way as Ulbricht’s, come amid a broader conversation about the potential for pardons. Legal professionals are noticing an uptick in inquiries about the possibility of receiving a presidential pardon, further fueled by Trump’s decision to grant clemency to Ulbricht.
Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.
