A Former Senior Security Engineer Pleads Guilty to Hacking Decentralized Exchanges
A former senior security engineer, Shakeeb Ahmed, has pled guilty to hacking a decentralized finance yield protocol called Nirvana Finance, along with another unnamed decentralized exchange. The United States Attorney’s Office of the Southern District of New York (SDNY) has described this case as the “first-ever conviction for the hack of a smart contract.” As part of the guilty plea, Ahmed will forfeit over $12.3 million in stolen assets.
Two DEX Attacks in One Month
In July 2022, Ahmed used his knowledge of reverse engineering smart contracts and blockchain audits to hack two decentralized crypto exchanges. He then laundered the stolen assets from both platforms using various methods such as crypto mixers and overseas exchanges. The first hack involved exploiting a vulnerability in a smart contract on an unnamed Solana-based exchange, allowing Ahmed to generate around $9 million in inflated fees.
Ahmed was later arrested in July 2023, making it the first arrest involving a smart contract hack. He was charged with wire fraud and money laundering, each carrying a maximum prison sentence of 20 years.
In the same month, Ahmed also attacked Nirvana Finance by using a flash loan to mint ANA tokens worth $10 million. He then swapped these tokens for $13.49 million in USDT and drained nearly $3.5 million from the platform’s treasury.
Despite being offered a bug bounty of $600,000 by Nirvana Finance, Ahmed refused and demanded $1.4 million instead. When no agreement was reached, he kept all the stolen funds, leading to the eventual shutdown of the exchange.
Hacker to Forfeit Stolen Funds and Pay Restitution
In addition to pleading guilty to computer fraud, Ahmed has agreed to forfeit over $12.3 million stolen from both hacks and pay $5 million in restitution to the affected victims. He faces a maximum sentence of five years imprisonment, with his sentencing scheduled for March 13, 2024.
Hot Take: First-Ever Conviction for a Smart Contract Hack
A former senior security engineer, Shakeeb Ahmed, has pled guilty to hacking decentralized exchanges, including the first-ever conviction for a smart contract hack. Ahmed used his knowledge of smart contracts and blockchain audits to exploit vulnerabilities and steal millions of dollars in assets. This case highlights the importance of robust security measures in the crypto industry and serves as a reminder that fraudsters will be swiftly caught and convicted. The guilty plea also demonstrates the commitment of law enforcement agencies to prosecute cybercriminals involved in cryptocurrency-related crimes. As the crypto industry continues to grow, it is crucial for individuals and platforms to prioritize security to protect against potential attacks.
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