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A major breakthrough occurred on the digital frontlines as a tech expert found himself on the wrong side of the law. Shakeeb Ahmed, a former security engineer for a leading global tech firm, was apprehended for allegedly manipulating a coding loophole in a decentralized cryptocurrency exchange, making off with a staggering $9 million.
In July of last year, a Solana-based exchange became the target of Ahmed's actions. It is reported that Ahmed took advantage of a glitch in the exchange's smart contracts. His method involved creating excessive fees through quick loans, which he subsequently withdrew.
According to Damian Williams, the US Attorney for the Southern District of New York, the illicitly obtained digital currency was laundered through intricate transfers on the blockchain. This process involved crypto-swapping, cross-chain hopping, and the use of international exchanges.
Although Williams did not disclose the exact decentralized exchange (DEX) affected, previous reports suggest that Solana-based liquidity protocol Crema Finance was the victim. The hacker managed to pilfer $9.6 million in cryptocurrency on July 2, 2022, but most of the stolen amount was returned, with $1.6 million kept as a so-called 'white hat bounty'.
In a similar vein, Ahmed attempted to refund the majority of the stolen digital assets, withholding $1.5 million. His refund plan was contingent on the crypto exchange refraining from notifying law enforcement.
Unfortunately for Ahmed, his diversionary efforts were unsuccessful. Despite elaborate attempts to erase his digital footprints, Ahmed was apprehended in New York. He now faces charges of wire fraud and money laundering in connection with the attack on the Solana-based exchange.
This indictment sets an important precedent. As noted by crypto and startup lawyer "Orlando.btc," it demonstrates the Department of Justice's determination to penalize any misuse of protocols beyond their intended function, potentially having far-reaching implications for the DeFi ecosystem.
