Tether, the issuer of the popular stablecoin USDT, has blacklisted an address responsible for draining $25 million in Maximal Extractable Value (MEV) bots last week.

The address exploited a bug in the MEV-boost relay to outsmart the bots attempting to execute a sandwich trade. The MEV bot attempted to sandwich the original pending transaction, but the rogue validator addresses back-ran it, leading to significant losses in digital assets. This is currently the largest MEV exploit to date.

The USDT address held around $3 million in USDT and a total of $21 million in other ERC-20 tokens when Tether blacklisted it. However, the move by Tether has faced backlash from the community for its censorship approach. Some argued that MEV bots also take advantage of traders and that the sandwich trade was not as nefarious as the draining of their funds.

Some speculate that the blacklisting by Tether could be the result of a court order. The move has raised concerns in the DeFi community, with Jaynti Kanani, the co-founder of Polygon, calling it a “bad precedent,” and Jordan Hagan, the co-founder of Fastlane Labs, describing it as the “most concerning DeFi development of 2023.”

He added that the main issue is Tether’s willingness to block or unblock “large amounts based on activity in the consensus layer (Beacon Chain).”