U.S. Department of Justice Arrests Engineer Over $9M Crypto Theft – Shakeeb Ahmed, a security engineer, was arrested by the U.S. Department of Justice (DOJ) on charges of wire fraud and money laundering. The allegations state that Ahmed stole cryptocurrency valued at $9 million from an undisclosed decentralized cryptocurrency exchange. According to the DOJ, Ahmed engaged in fraudulent activities by manipulating pricing data, resulting in the generation of fees that he subsequently withdrew. The arrest of Ahmed took place on Tuesday following an investigation by the authorities.
“In July 2022, Ahmed carried out an attack on the Crypto Exchange by exploiting a vulnerability in one of the Crypto Exchange’s smart contracts and inserting fake pricing data to fraudulently cause that smart contract to generate approximately $9 million dollars’ worth of inflated fees that Ahmed did not legitimately earn, which fees Ahmed was able to withdraw from the Crypto Exchange in the form of cryptocurrency,” a DOJ press release said.
According to the DOJ, the DEX involved in the case operates on the Solana blockchain. Shakeeb Ahmed, as per allegations, utilized flash loans amounting to “tens of millions of dollars.” He deposited these loans into the liquidity pool of the DEX, withdrew the funds, and claimed a significant percentage as fees.
The indictment indicates that Ahmed executed a minimum of twenty-one flash loans. Furthermore, the DOJ claimed that Ahmed attempted to launder the obtained funds. He allegedly converted them into various cryptocurrencies, transferred them across different blockchains, converted them into monero (XMR), and sent them through multiple crypto exchanges.
Additionally, the DOJ stated that Ahmed proposed returning the majority of the funds to the DEX, on the condition that the developers refrain from involving law enforcement authorities. Although the DEX involved was not explicitly named by the DOJ, the provided information aligns with a similar incident that occurred last year at Crema Finance, a DEX operating on the Solana blockchain.
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In July of the previous year, an attacker successfully obtained over $9 million from the DEX, eventually returning approximately $8 million while retaining approximately $1.7 million. Furthermore, additional details mentioned in the indictment indicate the possibility of Crema being the affected exchange. Ahmed allegedly read a news article titled “[Crypto Exchange] Vulnerability Causes DeFi Clients to Lose Millions,” which corresponds to an article from FXLeaders.