Ex-Security Engineer Sentenced to 3 Years For $12M Crypto Hack

A former security engineer, Shakeeb Ahmed, has been jailed for three years for his role in stealing $12 million from two crypto exchanges.

Shakeeb Ahmed, a former security engineer, was sentenced to three years in prison for his involvement in misappropriating more than $12 million from two cryptocurrency exchanges. A federal judge administered the sentence and additionally mandated a period of three years of supervised release. 

Shakeeb Ahmed was apprehended and indicted on wire fraud and money laundering charges concerning the theft of around $9 million from Crema Finance, a Solana blockchain-based decentralized cryptocurrency exchange (DEX). 

SHAKEEB AHMED was sentenced today by a U.S. District Judge to three years in prison for hacking two separate DEXs and stealing more than $12 million worth of cryptocurrency, marking the first-ever U.S. conviction for hacking a smart contract. One such DEX is Nirvana Finance.…

— Wu Blockchain (@WuBlockchain) April 12, 2024

Through the manipulation of smart contracts and the injection of erroneous pricing data, he was able to extract exorbitant fees. According to the U.S. Department of Justice, Ahmed executed twenty-one flash loans and generated enormous illegitimate profits by utilizing the DEX liquidity pool. 

In addition to the breach at Crema Finance, Ahmed participated in an additional heist at Nirvana Finance, which netted him over $12 million. Ahmed, who entered a guilty plea regarding the computer fraud charge, was apprehended in July 2022. His trial subsequently commenced in December of the identical year. 

The Sentencing And Restitution of Shakeeb Ahmed 

Initially, federal prosecutors recommended a four-year prison term when determining the sentence, taking into account the heinous nature of the offenses; however, Ahmed’s cooperation was considered. Ahmed was sentenced to three years in prison and ordered to forfeit $12.3 million and make restitution of $5 million by the magistrate. 

Ahmed’s legal representative argued in favor of leniency, citing his voluntary disclosure of his second breach on Nirvana Finance as grounds. Ahmed was cognizant that this admission could result in the court rescinding his plea agreement. Despite this, the court imposed a custodial sentence to underscore the seriousness of the offenses he had undertaken. 

Impact on The Cryptocurrency Industry

This case is recognized as the initial conviction that U.S. Attorney Damian Williams secured in connection with the breach of a smart contract. It draws attention to the legal issues and expanding legal precedents surrounding cyber security and misconduct in the cryptocurrency industry, which is more closely observed. 

Prosecuting such cases aims to establish a specific trajectory concerning the legal ramifications associated with cyber larceny and the manipulation of digital currency-related technological infrastructures. 

As a result, Ahmed’s sentencing underscores the persistent endeavors of law enforcement agencies to apprehend and litigate individuals who exploit the realm of digital finance, irrespective of the complexity of their methods.