Ross Ulbricht Lost $12M on PumpFun

Ross Ulbricht experienced a significant financial loss totaling $12 million while trying to provide liquidity on Raydium. The incident unfolded over a series of unfortunate events stemming from Ulbricht’s attempt to offload a substantial holding of ROSS tokens, a cryptocurrency purportedly associated with a fund bearing his name.

How the Ross Ulbricht Loss Happened

Ulbricht, or an entity with control of his wallets, received 50% of the ROSS token supply, a donation from the project’s developers. He aimed to gradually sell these tokens through a passive liquidity provision strategy on the Raydium decentralized exchange.

However, a critical error occurred during the execution of this strategy. Rather than utilizing the more efficient Concentrated Liquidity Market Maker (CLMM) system, Ulbricht inadvertently deployed liquidity via the Constant-Product Market Maker (CPMM) system. This seemingly minor technical oversight proved catastrophic.

The CPMM system, known for its less efficient price impact, left Ulbricht’s liquidity pool exceptionally vulnerable to exploitation. A sophisticated MEV bot swiftly identified this vulnerability. With a minimal investment of approximately $556 in Solana (SOL), the bot acquired a staggering 398.6 million ROSS tokens at a drastically undervalued price. This acquisition represented a significant portion – approximately 40% – of the total token supply.

Costly Error Drove Down Ross Token Price

The error wasn’t a single incident. Ulbricht’s attempts to provide liquidity resulted in two separate instances of significant losses. The first cost approximately $1.5 million, representing 5% of the token supply.

The second, even more substantial, resulted in a loss of $10.5 million, or 35% of the circulating supply. In total, Ulbricht’s missteps cost him approximately $12 million worth of ROSS tokens.

This massive sell-off triggered a dramatic price collapse, plummeting the value of ROSS by approximately 90%. The bot’s net profit from this maneuver reached over $600,000, a stark demonstration of the potential for lucrative exploitation within DeFi.

Despite these substantial losses, Ulbricht retains a portion of his initial ROSS holding. Approximately 10% of the supply remains in a separate wallet, successfully added to a Raydium CLMM pool, currently valued at approximately $200,000.