May 23, 2024
Engineer Confesses to Landmark Crypto Hacks
Latest Cryptocurrency News

Engineer Confesses to Landmark Crypto Hacks

Shakeeb Ahmed, a previous security engineer for an international technology company, has taken responsibility for hacking Nirvana Finance and an undisclosed decentralized cryptocurrency exchange, marking a significant milestone in smart contract breaches.

Acknowledging Deception
In a statement from the Southern District of New York, the United States Attorney revealed Shakeeb Ahmed’s admission today regarding his involvement in the hacking of two separate decentralized cryptocurrency exchanges, including the July 2022 breach of Nirvana Finance.

Ahmed pleaded guilty to computer fraud before U.S. Magistrate Judge Ona T. Wang and committed to returning all pilfered crypto to the victims. Additionally, he agreed to forfeit over $12.3 million, encompassing approximately $5.6 million in fraudulently obtained cryptocurrency.

U.S. Attorney Damian Williams highlighted Ahmed’s attempts to conceal his actions in a statement, emphasizing that despite the sophistication of the methods used, fraud is fraud, and perpetrators will be promptly apprehended and convicted.

Understanding the Hacking Process
On July 2 and 3, 2022, Ahmed exploited a vulnerability in a smart contract of an unspecified Crypto Exchange, manipulating pricing data to generate approximately $9 million in inflated fees. Following the heist, he negotiated with the Crypto Exchange, agreeing to return all stolen funds except for $1.5 million if they refrained from involving law enforcement.

Continuing the Exploits
Ahmed targeted Nirvana, a second decentralized finance protocol, around July 28, 2022, using a flash loan of approximately $10 million. Exploiting a discovered smart contract vulnerability, he purchased ANA from Nirvana at its initial low price and later sold it back at the updated, higher price, resulting in a $3.6 million profit. Despite Nirvana’s $600,000 bug bounty offer, Ahmed demanded $1.4 million, leading to a standoff and eventual collapse of Nirvana.

Laundering Ill-Gotten Gains
Ahmed laundered the stolen millions using advanced techniques, including token-swap transactions, bridging fraud proceeds between the Solana and Ethereum blockchains, converting fraud proceeds into Monero for anonymity, and utilizing overseas cryptocurrency exchanges and mixers like Samourai Whirlpool.

Legal Consequences
The 34-year-old has pleaded guilty to one count of computer fraud, facing a maximum prison sentence of five years. He has also agreed to pay restitution totaling $5 million to his victims. The community awaits the sentencing, scheduled for March 13, 2024.

Photo by Negative Space

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