Security Engineer Gets 3-Year Prison Term for Hacking Decentralized Crypto Exchanges
The court sentenced Shakeeb Ahmed, a former senior security engineer, to three years in prison for hacking two separate decentralized crypto exchanges and stealing over $12 million worth of cryptocurrency.
Damian Williams, the United States Attorney for the Southern District of New York, announced the sentence, marking the first-ever conviction for the hack of a smart contract.
Key points:
- Shakeeb Ahmed, a 34-year-old U.S. citizen from New York, pleaded guilty to computer fraud.
- In July 2022, Ahmed hacked a decentralized cryptocurrency exchange using fake pricing data, generating approximately $9 million in inflated fees.
- Ahmed also exploited a vulnerability in Nirvana Finance’s smart contracts, stealing $3.6 million and causing the platform to shut down.
- In addition to the prison term, Ahmed was ordered to forfeit $12.3 million.
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According to a press release by the Department of Justice, Ahmed carried out the first crypto hacking attack on a decentralized cryptocurrency exchange on July 2 and 3, 2022.
Using fake pricing data, he generated approximately $9 million worth of inflated fees, which he then withdrew in the form of cryptocurrency. Following the theft, Ahmed began communicating with the exchange.
He also promised to return all stolen funds, except $1.5 million, if the exchange committed not to report the incident to authorities.
Ahmed also attacked Nirvana in July
Just a few weeks later, on July 28, 2022, Ahmed launched a second attack on Nirvana Finance, another decentralized cryptocurrency exchange.
Ahmed exploited a vulnerability in Nirvana’s smart contracts to purchase cryptocurrency at a lower price than the contract’s design. He then promptly resold it to Nirvana at a higher price.
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Despite Nirvana’s offer of a “bug bounty” of up to $600,000 for the return of the stolen funds, Ahmed demanded $1.4 million and ultimately kept all of them, totaling $3.6 million. The loss represented nearly all of Nirvana’s funds, forcing the platform to shut down shortly after the attack.
Ahmed was a senior security engineer for an international technology company when the attacks happened. U.S. Attorney Damian Williams emphasized the significance of the conviction and sentencing, stating, “No matter how novel or sophisticated the hack, this Office and our law enforcement partners are committed to following the money and bringing hackers to justice.“
