Crypto Analyzer

Ex-Security Engineer Jailed 3 Years for $12.3 Million Crypto Exchange Thefts

# Former Security Engineer Sentenced to 3 Years in Prison for $12.3 Million Crypto Exchange Thefts

A former security engineer, Shakeeb Ahmed, has been sentenced to three years in prison in the United States for charges related to hacking two decentralized cryptocurrency exchanges in July 2022 and stealing over $12.3 million. Ahmed, a U.S. citizen and senior security engineer for an international technology company, used his skills in reverse engineering smart contracts and blockchain audits to carry out the hacks.

Ahmed pleaded guilty to one count of computer fraud in December 2023 following his arrest in July. He exploited a security flaw in an unnamed cryptocurrency exchange’s smart contracts to manipulate pricing data and generate inflated fees that he could withdraw. After the attacks, he contacted the company and offered to return most of the funds, except for $1.5 million, in exchange for not reporting the incident to law enforcement.

Additionally, Ahmed was accused of attacking a second decentralized cryptocurrency exchange called Nirvana Finance, where he siphoned $3.6 million, leading to the exchange’s shutdown. He used an exploit in Nirvana’s smart contracts to purchase cryptocurrency at a lower price and then resell it at a higher price. Despite Nirvana offering him a bug bounty to return the stolen funds, Ahmed demanded a higher sum and kept all the stolen money.

To cover his tracks, Ahmed laundered the stolen funds by utilizing cross-chain bridges to move the assets between different blockchains and converting them into Monero using mixers. In addition to the jail term, Ahmed has been sentenced to three years of supervised release, ordered to forfeit approximately $12.3 million, and instructed to pay restitution of over $5 million to the affected cryptocurrency exchanges.

The case highlights the risks associated with cybersecurity breaches in the cryptocurrency industry and emphasizes the importance of robust security measures to protect digital assets. The incident serves as a reminder of the consequences individuals face for engaging in illegal activities related to crypto theft and fraud.

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