An American hacker convicted of looting more than $12 million in crypto assets from two decentralized exchanges (DEXs) was sentenced to three years in prison.
According to the U.S. Department of Justice, in July 2022, Shakeeb Ahmed, a security engineer, used false pricing data to generate approximately $9 million in inflated fees for an undisclosed DEX.
Ahmed subsequently withdrew those fees in the form of crypto, but he agreed to return all but $1.5 million of the stolen funds if the exchange agreed not to report the attack to law enforcement.
Later that month, the hacker also hit a DEX called Nirvana Finance, exploiting the project’s smart contracts to offer cheaper crypto purchases. After purchasing the artificially devalued crypto, Ahmed immediately sold the digital asset to the DEX at a higher price. He managed to loot $3.6 million worth of crypto through the exploit, emptying Nirvana’s coffers and shutting down the DEX.
The hacker pleaded guilty to computer fraud and will serve three years of supervised release in addition to his three-year prison sentence. He was also ordered to forfeit approximately $12.3 million and a “significant amount” of cryptocurrency, as well as $5 million in restitution to the two DEXs.
Damian Williams, the U.S. Attorney for the Southern District of New York, said Ahmed’s prosecution marks the first-ever conviction for the smart contract hack.
“No matter how new or sophisticated the hack, this agency and our law enforcement partners are committed to following the money and bringing hackers to justice. And as today’s verdict shows, a prison sentence – and the loss of all stolen cryptocurrency – is the inevitable consequence of such destructive hacks.”
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