Crypto Engineer Gets Arrested for $9M Theft

A former security engineer for a multinational technology company has been arrested and charged with using a smart contract flaw to steal $9 million worth of cryptocurrency from a decentralized cryptocurrency exchange in Solana.

Damian Williams, United States Attorney for the Southern District of New York, announced the “first-ever criminal case” involving an attack on a smart contract managed by a decentralized exchange (DEX) on June 11.

Williams claims in a statement that the accused, Shakeeb Ahmed, “used his expertise to defraud the exchange and its users and to steal approximately $9 million in cryptocurrency.”

Williams stated that the attack was directed at a Solana-based DEX in July 2022.

The attack involved exploiting a flaw in the exchange’s smart contracts to generate flash loans with inflated fees.

These were then withdrawn and laundered through a “series of complex transfers on the blockchain where he swapped cryptocurrencies, hopped across different crypto blockchains, and used overseas crypto exchanges.”

While Williams did not disclose the DEX that was exploited in July, previous reports indicate that on July 2, 2022, an unknown hacker used the Solana-based liquidity protocol Crema Finance and stole $9.6 million in cryptocurrency.

The exploiter eventually returned most of the stolen funds but was allowed to keep $1.6 million as a white-hat bounty.

Similarly, William’s statement revealed that Ahmed returned all the stolen funds, minus $1.5 million, on the condition that the cryptocurrency exchange did not report the attack to law enforcement.

“None of these actions covered the defendant’s tracks or deceived law enforcement, nor did they prevent my office or our law enforcement partners from following the money,” he stated.

Ahmed was arrested in New York and charged with wire fraud and money laundering in connection with the July 2022 attack on the Solana-based DEX.

In response to recent news, crypto and startup attorney Orlando.btc stated that the move could benefit the decentralized finance ecosystem.

The indictment indicates that the U.S. Department of Justice will “pursue criminal charges if a person intentionally uses a protocol in a way that it was not intended to be used.”