NEW YORK, NY – Shakeeb Ahmed, a former senior security engineer, has been sentenced to three years in prison for hacking two decentralized cryptocurrency exchanges and stealing over $12 million worth of cryptocurrency. The sentence, handed down by U.S. District Judge Victor Marrero, includes three years of supervised release, and Ahmed is also required to forfeit the stolen funds and pay restitution exceeding $5 million.
U.S. Attorney Damian Williams announced the sentencing, emphasizing the significance of this being the first-ever conviction for hacking a smart contract. Ahmed’s hacks involved exploiting weaknesses in the exchanges’ systems to manipulate transactions and pricing data for personal gain. In July 2022, he defrauded one exchange out of approximately $9 million and later attempted to negotiate immunity from prosecution in exchange for returning the stolen funds. A subsequent hack in late July led to the theft of $3.6 million from Nirvana Finance, which resulted in the platform’s shutdown.
The sophisticated laundering techniques Ahmed employed included using token-swap transactions, bridging funds across different blockchains, and converting assets into Monero, an anonymized cryptocurrency. These methods complicated efforts to trace the stolen funds.
Ahmed’s technical expertise in reverse engineering and blockchain audits, gained through his career as a security engineer, played a crucial role in his ability to carry out these crimes. The case highlights the ongoing challenges and risks associated with securing digital assets in the rapidly evolving landscape of decentralized finance.
