Bungled $50m Aave trade highly unlikely to be money laundering, experts say

When a crypto trader accidentally swapped $50 million for $37,000 last week using a decentralised finance app, onlookers were flabbergasted by the mistake.

Post mortems from Aave and CoW Swap, the DeFi apps the trader used, chalked up the trade to a tragic case of user error. But not everyone was convinced by the explanation.

Some have speculated that the lopsided swap was actually an elaborate way to launder funds disguised as a terrible, yet legitimate, transaction.

That’s almost certainly not the case, according to experts.

“There are far cleaner, more efficient and less visible ways to move funds than through a trade that immediately attracts this level of scrutiny, public attention and forensic analysis,” Nikita Ovchinnik, CEO of Barter, a solver on decentralised exchange CoW Swap, told DL News.

“The sheer amount of buzz around this case cuts against the laundering theory rather than supporting it.”

Money laundering is a persistent liability in the crypto industry.

It’s hard to eliminate completely. Once one money laundering strategy has been identified and prevented, criminals spin up more in a perpetual game of whack-a-mole with crypto security firms and exchanges.

In 2023, top crypto exchange Binance pleaded guilty and agreed to pay more than $4 billion in penalties to resolve charges of money laundering and sanctions violations brought by the US government.

In 2024, BitMEX, best known for inventing the perpetual swap contract, admitted to failing to establish and maintain an adequate anti-money laundering programme.

OKX, a California-based exchange, also pleaded guilty in February 2025 to operating an unlicensed money transmitting business and violating US anti-money laundering laws.

A colossal error?

On March 12, an unknown trader attempted to use DeFi lender Aave’s website to swap $50 million worth of the USDT stablecoin for Aave tokens, in what should have been a routine transaction.

However, the permissionless apps the trader used offered a highly imbalanced trade. Despite on-screen warnings the trader accepted the swap, exchanging their $50 million USDT for just 327 Aave tokens, worth just $37,000.

Once the trade was confirmed, over a dozen arbitrage bots rushed to take advantage of the situation and extract the surplus funds using a technique called backrunning.

For many, it was hard to believe a trader could make such a colossal error with such a huge amount of money.

Yet that’s still the most likely explanation, according to 0xngmi, the pseudonymous head of DefiLlama, DL News’ sister company.

He listed several reasons why.

Firstly, the bungled transaction was sent to the Ethereum public mempool, a waiting room for transactions before they’re added to the blockchain. This, 0xngmi said, meant that anyone could have tried to extract money from the transaction, with no guarantee that it would have gone to a predetermined party.

“If it was some kind of money laundering scheme, it would have been passed directly to the backrun bot to reduce risk,” 0xngmi said.

Additionally, over $35 million from the transaction was kept by Titan, the well-known block builder who processed the transaction.

Any money launderer would need to be in cahoots with Titan, which seems highly unlikely, 0xngmi said.

Finally, significant sums were taken by Aave, CoW Swap, and liquid staking protocol Lido in fees from the transaction, making it a very inefficient way to launder money.

Creative money laundering

Suspicions that the $50 million swap blunder could be an elaborate money laundering scheme aren’t unfounded.

Crypto security experts have previously documented several unconventional and creative methods through which criminals have attempted to launder their ill-gotten gains.

Last year, a lawsuit brought against Pump.fun, a memecoin creation platform, alleged that North Korean crime syndicate Lazarus Group used the platform to launder money stolen in the $1.5 billion hack of crypto exchange Bybit.

The plaintiffs allege Lazarus Group created a memecoin called “QinShihuang,” and used stolen funds to pump its value, stimulating organic interest from other Pump.fun users, and blending illicit capital with that of retail traders before cashing out.

In 2022, Chainalysis, a blockchain security firm, also identified “small but visible” examples of criminals using marketplaces for non-fungible tokens, or NFTs, to launder money.

In this case, however, all the evidence points to the lopsided Aave trade being a tragic case of user error, analysts say.

“What’s easier, a crazy confluence of factors lead to a guy doing money laundering in an extremely inefficient way and with insane risk,” 0xngmi said.

“Or a guy simply clicked a checkbox without looking when doing a swap.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.