A former security engineer named Shakeeb Ahmed, who masterminded a string of heists on two decentralized cryptocurrency exchanges (DEXs), resulting in over $12 million in stolen crypto, was handed a three-year prison sentence today. This marks the first smart contract hacking conviction in the United States.
Ahmed was also ordered to forfeit the stolen crypto and pay restitution to the affected exchanges.
Engineer Exploits Crypto Vulnerabilities In $12 Million Hacks
Based on legal papers and court records, Ahmed allegedly carried out two distinct assaults on decentralized exchanges during July 2022. In the initial occurrence, he artificially inflated pricing data to amass around $9 million in heightened transaction fees. Following this, Ahmed reportedly claimed and received these fees as cryptocurrency payments.
After the incident of fund theft, Ahmed reached out to the exchange proposing to repay the stolen amount, leaving out a sum of $1.5 million, on the condition that no legal authorities were involved.
After the previous incident on July 28, 2022, Ahmed identified another decentralized exchange named Nirvana Finance with a weakness in its smart contracts. He took advantage of this flaw and managed to buy crypto assets at underestimated prices. Momentarily afterward, he sold these same assets back to Nirvana at inflated prices.
Although Nirvana provided a generous reward of up to $600,000 for recovering stolen funds, Ahmed insisted on receiving a compensation of $1.4 million. Unfortunately, this demand resulted in the failure of Nirvana, which itself had been victimized and lost around $3.6 million due to Ahmed’s cyberattack.
From Security Expert To Cybercriminal
During the probe, it was uncovered that Ahmed employed sophisticated methods to hide the origin and possession of the ill-gotten gains.
One method involved conducting token swaps, moving suspected fraud proceeds from the Solana (SOL) blockchain to the Ethereum (ETH) one via “bridging” platforms, converting those funds into Monero, and finally utilizing offshore exchanges and cryptocurrency tumblers such as Samourai Whirlpool for further transactions.
At the time of the attacks, Ahmed, who is a US citizen, held a significant security engineer role at an international tech firm. His resume highlighted his proficiency in deciphering complex smart contracts and performing thorough blockchain investigations. Utilizing these abilities, he carried out the cyberattacks.
Besides serving three years in prison, Ahmed was ordered to undergo three years of supervision after his release. He is required to forfeit around $12.3 million, which includes a substantial amount of cryptocurrency, and pay over $5 million in compensation to the affected exchanges. Regarding Shakeeb Ahmed’s sentencing, US Attorney Damian Williams remarked:
Today, Shakeeb Ahmed received the first-ever prison sentence for hacking a smart contract, with a court order to surrender all ill-gotten cryptocurrencies. Regardless of the innovation or complexity behind such cyberattacks, this Office and our law enforcement allies remain resolute in tracing funds and prosecuting perpetrators. Today’s sentencing serves as a reminder that the consequences for destructive hacks include serving time in prison and forfeiting all stolen cryptocurrencies.
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2024-04-13 07:11