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First US criminal case for DeFi hacking

Shakeeb Ahmed, an experienced computer security engineer, has been indicted on charges related to the manipulation of a Solana-based decentralized cryptocurrency exchange. This case, announced on July 11 by Damian Williams, the United States Attorney for the Southern District of New York, is the first of its kind involving the exploitation of a DEX's smart contract. 


Some details

The exploit, occurred in July 2022, took advantage of a vulnerability in the DEX's smart contracts. By using flash loans, Ahmed allegedly fabricated inflated fees, which he later withdrew and laundered through complex blockchain transactions.

The indictment contains several noteworthy details:

πŸ™Š The name of the affected DEX has not been disclosed.

πŸ’Έ The hacker stole about $9 million.

🚨 Ahmed kept $1.5 million for himself and returned the rest under the condition that DEX would not report the attack to law enforcement. But the investigation proceeded regardless.

🌐 Following the hack, Ahmed searched Google for information about "his own criminal liability, criminal defense attorneys with expertise in similar cases, law enforcement's ability to successfully investigate the attack, and fleeing the United States to avoid criminal charges".

πŸ’° The stolen funds were reportedly laundered "through: (a) conducting token-swap transactions; (b) "bridging" fraud proceeds from the Solana blockchain over to the Ethereum blockchain; (c) exchanging fraud proceeds into Monero, an anonymized and particularly difficult cryptocurrency to trace; and (d) using overseas cryptocurrency exchanges".

Check out the thread of crypto & startup lawyer orlando.btc for a detailed analysis of the indictment. 

Despite the grave allegations, Ahmed is presumed innocent unless and until proven guilty. If convicted, he could face a maximum sentence of 20 years in prison for both wire fraud and money laundering.

Maria Kachura
Maria Kachura

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