Ahmed took advantage of a weakness in the smart contract of a decentralized cryptocurrency exchange by inserting false pricing data. This action led to the creation of exaggerated fees amounting to $9 million, which he then withdrew in cryptocurrency.
After the theft, Ahmed tried to blackmail the exchange by offering to return $7.5 million of the stolen funds under the condition that they avoid involving law enforcement.
He identified a vulnerability in Nirvana Finance’s smart contracts, enabling him to purchase cryptocurrency at a significantly reduced price and subsequently sell it back to Nirvana at market value, depleting nearly all of their funds.
To conceal the illicitly obtained funds, he utilized various money laundering methods by converting the stolen crypto into different tokens through token-swap transactions. Subsequently, he transferred these funds from the Solana blockchain to the Ethereum blockchain, effectively moving them across distinct networks.
Finally, he converted the assets into Monero, a privacy-centric cryptocurrency, and utilized anonymous exchanges and mixers to further obscure the transaction trail.
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Understanding Blockchain Security
Leveraging his profound expertise in blockchain security, Ahmed, a senior security engineer and US citizen working for a renowned international technology firm, executed successful cyberattacks against two cryptocurrency exchanges.
His extensive background in reverse engineering smart contracts, which involves scrutinizing and comprehending their code to pinpoint potential vulnerabilities, coupled with his proficiency in blockchain auditing—a process dedicated to ensuring the security of blockchain transactions—equipped him with the necessary tools to exploit weaknesses in the exchanges’ smart contracts.
The vulnerabilities, originating from deficiencies in the code governing the exchanges’ functionalities, empowered Ahmed to manipulate data for personal gain. Through these intricate attacks, he managed to abscond with over $12 million in cryptocurrency.
Ahmed, a resident of New York aged 34, received a three-year prison sentence and an additional three years of supervised release for his involvement in exploiting vulnerabilities within cryptocurrency exchanges.
Furthermore, the court mandated the confiscation of $12.3 million and an undisclosed quantity of cryptocurrency.
He is accountable for repaying over $5 million to the affected exchanges, with Homeland Security Investigations and the Internal Revenue Service’s Criminal Investigation Unit being acknowledged for their roles in the case.
As per the Justice Government, Shakeeb Ahmed, a former security engineer, was sentenced to three years in prison for penetrating two decentralized cryptocurrency exchanges (DEXs) in a groundbreaking conviction related to smart contract breaches.
Utilizing his expertise in reverse engineering and blockchain audits, he identified vulnerabilities within the smart contracts, leading to the forfeiture of \(12.3 million and a substantial amount of cryptocurrency. Additionally, he was ordered to pay \)5 million in restitution to the impacted DEXs.
This case underscores the collaborative efforts between the Illicit Finance and Money Laundering Unit and the Complex Frauds and Cybercrime Unit in combating cryptocurrency-related cybercrimes.
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