Saturday, May 18, 2024

Former Security Engineer Arrested for Stealing $9 Million from Crypto Exchange

Shakeeb Ahmed, a former security engineer, has been arrested for defrauding a decentralized crypto exchange and stealing over $9 million.

A digital currency exchange, also known as a cryptocurrency exchange (DCE), is a company that enables individuals to trade cryptocurrencies or digital currencies for other assets, such as traditional fiat money or other digital currencies.

This marks the first criminal case involving a smart contract operated by a decentralized exchange.

Vulnerability in Crypto Exchange’s Smart Contracts

In July 2022, Ahmed took advantage of a vulnerability in smart contracts and inserted fake pricing data, resulting in fraudulent gains of approximately $9 million. He also utilized “flash loans” to defraud the crypto exchange.

Utilizing his specialized skills as a senior security engineer, he forcefully carried out the attack by reverse engineering smart contracts and conducting rigorous blockchain audits.

After committing theft, he made the decision to return all of the stolen money except for $1.5 million to the Crypto Exchange, on the condition that they did not report the incident to law enforcement.

Ahmed concealed the source and ownership of the millions he stole from the Crypto Exchange by laundering them through fees, including (i) conducting token-swap transactions, (ii) “bridging” fraud proceeds from the Solana blockchain over to the Ethereum blockchain, (iii) exchanging fraud proceeds into Monero, an anonymized and particularly difficult cryptocurrency to trace, and (iv) using overseas cryptocurrency exchanges.

After this, he started to search online for these criminal accountabilities with similar previous attacks; he searched about ‘defi hack’ and search several news about these articles For example: searching for the term “wire fraud” and for the term “evidence laundering.”

Particularly he searched “can I cross the border with crypto,” “how to stop the federal government from seizing assets,” and “buying citizenship”; and he visited a website titled “16 Countries Where Your Investments Can Buy Citizenship.

“The case is being prosecuted by the Office’s Money Laundering and Transnational Criminal Enterprises Unit and Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David R. Felton and Kevin Mead are in charge of the prosecution.”

As a consequence of the attack, he was sentenced to 20 years in prison in New York.


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Guru baran
Guru baran
Gurubaran is a co-founder of Cyber Security News and GBHackers On Security. He has 10+ years of experience as a Security Consultant, Editor, and Analyst in cybersecurity, technology, and communications.

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