In a landmark case for the cryptocurrency industry, Damian Williams, the U.S. Attorney for the Southern District of New York, has announced the guilty plea of Shakeeb Ahmed, who hacked DeFi protocol Nirvana Finance and one other cryptocurrency exchange.
Williams calls this the first-ever conviction for the hack of a smart contract.
Ahmed, who was a senior security engineer, admitted to his crimes before U.S. Magistrate Judge Ona T. Wang and agreed to forfeit over $12.3 million, including approximately $5.6 million in fraudulently obtained cryptocurrency.
Williams stated, “Five months ago, my Office announced the first-ever arrest involving an attack on a smart contract. Today, that arrest is now the first ever conviction for such a hack.”
He further detailed how Ahmed used his technical expertise to steal over $12 million, employing sophisticated methods such as swapping stolen crypto for Monero, using cryptocurrency mixers, and utilizing overseas exchanges.
The charging documents revealed that Ahmed executed the hacks in July 2022, targeting Nirvana Finance and another exchange referred to as the "Crypto Exchange."
At the time, Ahmed exploited vulnerabilities in the exchanges' smart contracts, using fake pricing data to generate inflated fees and manipulate the price of Nirvana's cryptocurrency token, ANA.
In the attack on the Crypto Exchange, Ahmed fraudulently generated approximately $9 million worth of inflated fees and subsequently withdrew them in cryptocurrency.
He then negotiated with the Crypto Exchange to return the stolen funds except for $1.5 million, so the attack would not be reported to law enforcement.
The Nirvana Finance hack involved Ahmed taking a flash loan of approximately $10 million, purchasing Nirvana ANA/USD tokens at an initial low price due to an exploit in the smart contracts, and then reselling them at a higher price, profiting around $3.6 million.
This attack resulted in Nirvana Finance shutting down, losing nearly all its funds.
Ahmed attempted to launder the stolen millions using advanced techniques, including bridging fraud proceeds between blockchains, exchanging them into untraceable cryptocurrencies, and using international exchanges and mixers.
Following the hacks, Ahmed conducted online searches related to the hacks, criminal defense, law enforcement investigations, and the possibility of fleeing the U.S. to evade charges.
His search history included terms such as “defi hack,” “wire fraud,” and “buying citizenship,” indicating his awareness of the criminal nature of his actions and potential consequences.
Read Next: SEC's Lack Of Action On Crypto Regulation Triggers Coinbase's Legal Challenge
Image: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
